Paraguay President Santiago Peña Impeached and Placed Under House Arrest After Bank Collapse

Paraguay's political landscape shifted abruptly on Friday when the country's Senate voted unanimously to impeach President Santiago Peña, following the collapse of Ueno Bank, a government-linked financial institution whose failure locked nearly half of the nation's six million citizens out of their savings. All 44 senators present voted to remove the president for misconduct in office, making him the second Paraguayan leader ousted through impeachment since the end of Gen. Alfredo Stroessner's 35-year dictatorship in 1989.

Shortly after the verdict, Peña was placed under house arrest on suspicion of breach of trust, influence peddling and using public office for personal gain. He was ordered to remain at one of his residences in Asunción until he appears before prosecutors on Saturday morning. The most serious of the charges carry a maximum penalty of ten years in prison. Police surrounded the property on Friday night as crowds gathered outside, waving flags and pledging to maintain a vigil until morning.

The crisis was set in motion just three days before the impeachment vote, when regulators seized Ueno Bank, sending shockwaves through the country's financial system and triggering the worst political upheaval in more than a decade. Lawmakers allege that Peña used his political influence to channel hundreds of millions of dollars in public funds into the bank while regulators ignored risky insider lending practices. Prosecutors have also ordered the arrest of Carlos Carvallo, who headed the finance company that became Ueno before Peña appointed him central bank chief in 2023. It was not immediately clear whether Carvallo had been taken into custody.

As the verdict was announced, ending what had been regarded as one of South America's most stable presidencies, a roar rose from crowds packed into the plaza outside Congress. Depositors, retirees and students wearing national soccer jerseys waved Paraguayan flags, sang and embraced, chanting "Dictatorship never again!"

Vice President Pedro Alliana was sworn in as president on Friday to complete the term ending in August 2028. Alliana, who is himself under investigation in connection with the bank, acknowledged the gravity of the situation. "The Paraguay we receive today has urgent needs," he said, inheriting a government under intense pressure to return depositors' money and hold those responsible accountable. In a farewell message delivered before the verdict, Peña said he did not want his "presence to be a cause of greater division or instability."