Ousted Paraguay president under house arrest after banking crisis leaves 60% of country unable to access accounts

Paraguay's Senate unanimously ousted President Santiago Peña on Friday following the collapse of Ueno Bank, a major institution linked to his government. The 44 senators present voted to remove Peña for misconduct in office, paving the way for Vice President Pedro Alliana to assume the presidency. The decision came just three days after regulators seized Ueno Bank, freezing nearly 3 million customers' savings and igniting a political crisis.

Lawmakers accused Peña of misusing his political influence to funnel hundreds of millions of dollars in public funds into Ueno Bank while regulators overlooked risky lending practices. Peña has denied any wrongdoing. His removal also bars him from the lifetime Senate seat granted to former presidents under Paraguay's Constitution, denying him parliamentary immunity.

Prosecutors have initiated criminal investigations targeting Peña, current and former central bank and pension fund officials, and Alliana. Peña had submitted his resignation earlier in the week, but Congress did not accept it. His lawyers argued that lawmakers should have approved his departure instead of initiating an impeachment trial.

Opposition senators insisted on Peña's removal to prevent him from leaving office with immunity. In a farewell message released before the verdict, Peña expressed hope that his departure would spare Paraguay further harm, emphasizing his commitment to putting the country above his personal fate.

Public outrage has intensified as thousands of protesters demand the return of their frozen savings and accountability for Ueno's failure. Police clashes with demonstrators have occurred, with rubber bullets and pepper spray used by authorities. Paraguay's largest teachers' union, representing over 40,000 members, plans to initiate an indefinite national strike to push for the protection of public pension funds.

The bank collapse has plunged Paraguay into its most severe political crisis in over a decade. Regulators seized Ueno Bank early Tuesday, and Peña submitted his resignation later that day. Within days, Peña faced resignations from key members of his administration. This dramatic reversal of fortunes for Peña, once a telegenic technocrat and IMF economist, highlights the fragility of his political base, which relied heavily on Ueno Bank's public funding and the patronage of his mentor, former President Horacio Cartes.