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How One Bank Took Down an Entire Government — Transcript

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0:00Hi, welcome to another episode of Cold
0:02Fusion. It's just another Tuesday. You
0:04start your day as you normally do. On
0:07the way to work, you decide to check
0:08your banking app. Instead of the usual
0:10interface, it's a blank screen with one
0:12line of text. We cannot display the
0:14balance and [music] it's not a glitch.
0:17That was the reality for millions in
0:19Paraguay. On the 3rd of November 2026, a
0:22few hours earlier, the country's central
0:24bank had announced that it was taking
0:26over Wayeno Bank. This was a massive
0:29deal [music] because about 3 million
0:31people bank with Weno. Roughly 60% of
0:34the adult population. For 280,000 of
0:37them, it was the only bank they had.
0:39[music] Their salaries, their savings,
0:41they were all deposited there. And
0:43overnight, they were locked out of every
0:45cent.
0:45>> Was engulfed in political turmoil after
0:48a [music] banking scandal put its
0:50president and major institutions under
0:52scrutiny. [music] Paraguayan prosecutors
0:54say that Weno's owners had been covertly
0:56funneling depositors money into their
0:58own companies and somehow the country's
1:01president Santiago Pena is allegedly
1:03tied up in it too. As the news broke
1:06out, public [music] anger boiled over.
1:08Panicked customers crowded outside
1:10locked branches while protesters marched
1:12on Congress. Riot police fired rubber
1:14bullets and pepper spray to hold them
1:15back. It was pandemonium.
1:27Within a week, Congress had thrown the
1:29country's president out of office, and
1:31now he's being held at a military
1:33facility in the capital, watching from
1:35the other side of the world. Some may
1:37just shrug their shoulders as if this is
1:38someone else's problem. But the fact is,
1:41most of us run our entire financial
1:43lives on one or two apps. Picture
1:45opening yours tomorrow and seeing that
1:47[music] same message. For millions of
1:49Paraguayans, that's exactly what
1:51happened. So, how did the country's
1:52biggest bank catastrophically fail so
1:54quickly and drag the president down
1:57[music] with it? Could something like
1:58this happen where you live? Let's take a
2:00look.
2:02>> You are watching Till Fusion TV.
2:11When a bank counts most of a country's
2:13adults as customers, there's no question
2:15that it's the biggest bank in the
2:16country by headcount. On top of that,
2:19Weno was managing between $800 and $850
2:22million in public money. Though in the
2:24beginning, it was humble. In September
2:26of 2021, Group Basquez, a familyrun
2:29conglomerate, bought a sleepy old
2:31consumer lender called Finania El
2:33Commercial and renamed it Weno. Leading
2:36the takeover was Miguel Basquez, a young
2:38businessman from the family, and he had
2:40big plans for it. There was a huge
2:43opportunity here for him because in
2:452021, about half of all adults in
2:47Paraguay didn't have a bank account.
2:50According to the World Bank, fewer than
2:522 in 10 people had a debit card or
2:54credit card. In November of 2023, the
2:57central bank turned Weno into a full
2:58bank by granting it a banking license.
3:00To win over customers, Weno made joining
3:03ridiculously easy. You could open an
3:05account on your phone in under 4 minutes
3:07and every time you bought groceries with
3:09your Weno card, you would get some of
3:11that money back. [music] Unsurprisingly,
3:13people signed up in droves. Weno grew
3:16rapidly and before long they were
3:18sponsoring the national football team
3:20and they had its name on the stadiums of
3:21Paraguay's two biggest clubs. Does this
3:23ring an FTX bell, anyone? Anyway,
3:26McGill, now 36, talked openly about
3:29building Paraguay's first unicorn, a
3:31company worth a billion dollars. By
3:34March of this year, Weno had sold $350
3:36million in bonds to international
3:38investors. For a Paraguayan bank, it was
3:41[music] the biggest deal of its kind. To
3:43most people, this looked like a genuine
3:45success story. But what was going on
3:47behind the scenes inside of the bank was
3:49a completely different story. It turns
3:51out that they were hiding something and
3:53their actions would lead to disaster and
3:55throw the country into chaos.
3:59But before we get to that, this part of
4:01the episode is sponsored by Plaude.
4:03Every couple of weeks, we have an
4:04open-ended brainstorming [music] session
4:06with the Cold Fusion team. We throw
4:08around a few ideas for future episodes.
4:10And interestingly, the idea for this
4:12very episode came out of one of those
4:13conversations. The thing is, these
4:15sessions can go in all sorts of
4:17directions. We might discuss 10
4:19different topics, explore a few
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4:40afterwards, it's not always the most
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4:44hit record. Afterwards, it transcribes
4:47the conversation and organizes important
4:48points into a summary. And that's
4:50particularly useful for these
4:51brainstorming sessions. I can go back
4:53and see which ideas stood out, what we
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4:56needs to happen next. I can even ask
4:58Plaude to find a specific discussion
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5:28there's also a 30-day free return
5:30policy. Thanks to Plaude for supporting
5:32Cold Fusion. Now, back to the story.
5:37Behind the scenes, Weno, unfortunately,
5:39was breaking the oldest rule of banking.
5:41You see, when a customer deposits money,
5:43the bank lends out most of it to other
5:45people and businesses, and they earn
5:46interest on that. That's how commercial
5:48banking works in its simplest form. But
5:50things get dangerous when the people who
5:52own the bank start lending the
5:54depositor's money, your money, to
5:55themselves. It's the oldest trick in the
5:58book, which is why most countries keep a
6:00tight lid on that. Paraguay caps the
6:02loans to a bank's own insiders at 20% of
6:04its capital. Weno, on the other hand,
6:06blew straight past that line. Between
6:08September of 2025 and May of 2026, the
6:12bank lent around $146 million to three
6:15companies, nearly double what it was
6:17allowed. Prosecutors say that those
6:19companies were really linked to the
6:20Barksters family. Consumers money was
6:22being given right back to the people who
6:24owned the bank. Those companies had no
6:26business getting a loan at all. Just to
6:28give you an idea, one of them, Groupo
6:30Hendi, which was a cross between eBay
6:32and Craigslist, earned about $11,000 a
6:35month. Somehow, it walked away with a
6:37$42 million loan. While that money was
6:40walking out the door, Weno had also been
6:43cooking its books. Inspectors found that
6:45it was listing ordinary running costs as
6:47assets. That made the bank look far
6:49richer than it really was. Once that
6:51accounting mess is corrected for, the
6:53bank's capital, the cushion that's meant
6:54to protect consumer savings, came to
6:56less than half the legal minimum. In
6:59plain terms, the emperor had no clothes,
7:01and Paraguay's biggest bank was running
7:03on fumes, but it looked healthy on
7:05paper. So, the question [music] is, how
7:07did a bank get away with this for so
7:09long? A big part of that answer leads
7:11straight to the president's office.
7:14Santiago Penna, an economist, became
7:16Paraguay's president in August of 2023.
7:19He owned shares in the group that
7:20controlled Weno and he held them until
7:22March of 2025. For those paying
7:25attention, that's well into his
7:26presidency. [music] Weno insists that he
7:29never owned a piece of the bank itself.
7:31Before he'd even taken office, Santiago
7:33Pain picked a man named Carlos Cavalo to
7:36head Paraguay Central Bank. At the time,
7:38Cavalo was still in charge of financeier
7:41Weno, the lending company. Weno used to
7:43be watching over a country's banks is a
7:46primary function of a central bank. So
7:48now the head of the central bank was
7:50supervising the bank he used to run. Mr.
7:52Fox, meet the hen house and have fun. As
7:55expected, this arrangement was a
7:58disaster. Wayeno went from having zero
8:00public money when Paya took office in
8:012023 [music]
8:02to holding roughly 800 million in
8:04November of 2026. The biggest chunk
8:07[music] came from the IPS, the state
8:09fund that pays people's pensions and
8:11covers their healthcare. It had
8:13somewhere in the order of 355 million to
8:16380 million sitting in the bank. Around
8:1832,000 retirees were collecting their
8:21IPS pension funds through Weno itself.
8:24Some Paraguayan journalists think that
8:26the public money ended up in Weno by
8:27design. Whether it was planned or not,
8:30the timing had a distinctive smell, a
8:32smell of fish. Santiago Paya had barely
8:35settled into his presidency [music] when
8:37public money started pouring into the
8:39bank, a bank run by a group he'd
8:41invested in. Of course, eventually the
8:43cracks [music] started to show. The
8:45central bank had already flagged the
8:47insider lending. Then in October,
8:49[music] Fitch, one of the world's
8:50biggest credit rating agencies, warned
8:52it might downgrade Weno. The [music]
8:54president just brushed it all off as a
8:56media campaign. Behind the scenes, Weno
8:59[music] didn't even have 70 million in
9:01emergency reserves, which it was legally
9:03required to keep. The central bank had
9:06had enough. And despite the head of the
9:07central bank allegedly being involved,
9:09they stepped in. And then millions of
9:12people opened their app to that [music]
9:13blank screen.
9:17For the people that were locked out, the
9:18most important question really is when
9:20would they get their money back? Now,
9:22here's the part of the story that's
9:24actually reassuring. Thankfully, most of
9:26them will get all of their money back.
9:28The Paraguan government guarantees
9:30deposits up to $38,000 per person.
9:32[music] That covers almost everyone, 97%
9:35of those who banked with Weno. But
9:37there's a catch. That money is going
9:39[music] to be coming at a snail's pace.
9:40For now, people can only withdraw about
9:42$1,700 each. Anyone who'd never banked
9:45anywhere else first needs a new account
9:48opened up at another bank. The pension
9:50fund, however, is a bigger worry. The
9:52IPS is going to be paying the first
9:53month's pensions, but the hundreds of
9:55millions it had in Weno sit far above
9:57what the guarantee covers. How much of
9:59that the pensioners actually receive
10:01depends on what's left once the bank's
10:03assets are sold off. What really stings
10:05is that the people saw this coming.
10:07[music] Just weeks before the collapse,
10:09a group that included a teachers union
10:11and an association of IPS members
10:13demanded that the fund pull its money
10:15out of Weno. The fund's president
10:17[music] promised them a written reply. A
10:19week later, the bank was gone. Weno's
10:22own staff got hit twice. Around 7,000
10:25people who work for the bank, and
10:26Groupobus's other companies are now
10:28facing layoffs and chasing unpaid wages.
10:30[music] There's a cruel twist in all of
10:32this. Weno's big selling point was
10:34bringing people into the banking system
10:36for the first time. [music] And it did
10:37it for over a million Paraguans. For
10:40them, their first bank account [music]
10:42now turned into their first bank
10:43collapse. And it could be a long time
10:46before they trust a bank again.
10:51So, if you were online and saw the
10:53comments under any post about this
10:54story, the same worry kept coming up.
10:57Could this happen in my country?
11:00Frankly, it's [music] unlikely. The Weno
11:02disaster was a story of corruption,
11:04negligence, and a complete disregard for
11:06the law. It was far more than just
11:08economics, and a lot had to go wrong at
11:10once. But it doesn't mean that it can't
11:12happen. History has a few examples, and
11:14some come from much bigger economies
11:16than Paraguay. In 2014, Banko Aspirator
11:20Santo, Portugal's second largest private
11:22bank, collapsed after making improper
11:24loans to the controlling family
11:25companies. In 2019, the Indian PCM bank
11:30was caught hiding loans to a single
11:31property developer behind more than
11:3321,000 fake accounts. In that same year,
11:37China seized Bao Shang Bank after its
11:39biggest shareholder used hundreds of
11:41shell companies to borrow around $22
11:44billion it never paid back. Even Iceland
11:47went through a version of this. Its
11:48three biggest banks collapsed during the
11:50midst of the 2008 crisis. [music] But an
11:52official investigation found that they'd
11:54been lending freely to their own biggest
11:56shareholders. Banks can also fail for
11:58entirely different reasons. In 2023, as
12:01we covered, [music] Silicon Valley Bank
12:03went under after losses on its bond
12:04holdings sparked a panic. Customers
12:06tried to withdraw $42 billion in a
12:09single day. As we also covered, Credit
12:11Swiss fell the same year after years of
12:13bank scandals drained confidence in the
12:15bank. What made We no different was the
12:17combination. For something like that to
12:19happen where you live, the rules of
12:21insider lending would have to go
12:22uninforced, the regulator would either
12:24need to be asleep or have close ties to
12:26the bank it was meant to be watching. On
12:28top of that, the bank would have to be
12:30sitting on a mountain of public money.
12:31Most developed nations have a safety net
12:33for exactly this sort of situation. In
12:35the US, the FDIC ensures deposits up to
12:38$250,000 per person per bank.
12:40Australia's financial claim scheme
12:42covers the same amount. [music] And in
12:44the UK, it's £120,000.
12:47As Paraguans are finding out though,
12:48that safety net takes time to play out.
12:51That's why financial experts advise
12:52spreading your money across more than
12:54just one bank. So, a single failure
12:56can't freeze everything that you have.
12:58Those 280,000 Paraguayans had everything
13:01in Weno. And they learned the hard way.
13:07So, back to Paraguay. The fallout came
13:10fast and the people at the top of Weno
13:12went first. Miguel Basquez, the young
13:14founder, was taken into police custody
13:16hours after a warrant went out for his
13:18arrest. A judge sent him and five other
13:21executives to jail to await trial. In
13:23total, [music] 27 people have been
13:25charged so far. That's only one part of
13:27the investigation, though. The attorney
13:29general has three separate cases
13:31running. They're looking into how Weno
13:32was policed and how it ended up holding
13:34so much of the state's money. That last
13:36part is where the president comes in.
13:38According to prosecutors, Santiago Paya,
13:40the president, leaned on his position to
13:43push public money towards Weno, and he
13:45kept the regulators off his back even as
13:47the red flags mounted. The lawmakers who
13:49impeached him think that he had a
13:51personal motive, too. In their view,
13:53every dollar of public money that went
13:55into Weno helped the Basquez group grow,
13:57which in turn made Painter's own shares
13:59more valuable. They've also raised
14:01eyebrows over how quickly his personal
14:03wealth grew. Then the knife came from
14:06his own side. Horatio Cartees, a member
14:08from the president's own party and a man
14:10who backed his rise to power, publicly
14:12turned on him. He said, quote, "We will
14:15not stand on the side of the theft of
14:17public, [music] private, and pensioners
14:19funds. We must think of the people and
14:20the values we uphold in the Colorado
14:22party. We support the impeachment of the
14:24president of the republic, Santiago
14:26Payer, in order to restore the
14:28institutional order of the republic."
14:30With his own party against him, Paya
14:32tried to step down with an apology.
14:34Congress threw him out anyway, and that
14:36[clears throat] stopped him from
14:37retiring into a lifetime Senate seat
14:39that comes [music] with immunity. He's
14:40now charged with breach of trust and
14:42using his position for personal gain.
14:44Payner's lawyer says he's not pleading
14:46guilty, and none of this has been tested
14:48in court yet. But at the same time, his
14:50house was raided by authorities. Even
14:52the president's replacement has
14:54questions to answer. Pedro Aliana,
14:56Payne's vice president, who's now
14:58running the country, is also being
14:59investigated over his links to Weno. To
15:02top it off, the public is furious after
15:05a photo of the president's daughters are
15:06surfaced. It was her in a gym selfie
15:09with a shirt that said, "Tax the poor."
15:11No comment.
15:16For a few short years, Wayeno looked
15:18like proof that a small country could
15:20build something world class. It brought
15:22millions of people into banking, put its
15:24name on football stadiums, and courted
15:26investors on Wall Street. Then, in less
15:28than a week, it went from all of that to
15:30a catastrophic collapse, [music] riots
15:32in the street, and a former president in
15:34detention. What a lot of Paraguayans
15:37want to know now is why it took a full
15:39collapse after months of warnings for
15:41anyone to act. Thankfully, most of
15:43Weno's customers will get their [music]
15:45money back eventually, but winning faith
15:47back in the banking system is another
15:48question entirely. So, here's something
15:51to think about. Do you know who's
15:52keeping an eye on your bank? Who did
15:54they used to work for? It's worth
15:56thinking about. But anyway, [music] let
15:57me know what you thought about this
15:58story in the comment section below. So,
16:00that's about it from me. My name is
16:02Dogo. If you enjoyed this, feel free to
16:04subscribe to Cold Fusion. Also, if you
16:06want to check out my last video on the
16:08man who could have been a trillionaire
16:09but chose [music] to walk away, I'll
16:11leave a link for it in the description.
16:13All right, so you've been watching Cold
16:14Fusion, and I'll catch you again soon
16:16for the next episode. Cheers, guys.
16:18[music] Have a good one.

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