The banks that loaned Musk $13 billion to buy Twitter may have regrets

X, formerly known as Twitter, looks like a pretty bad investment right now.

As readers may recall, Elon Musk borrowed $13 billion from Morgan Stanley, Bank of America and five other major banks to help finance his $44 billion acquisition. According to the WSJ, the deal has since become the worst merger and financing deal for banks since the financial crisis of 2008-2009.

Why? When banks lend money for foreclosures, they typically sell that debt to others, earning commissions on the transaction. This was not possible with X due to the poor financial situation, so the loans weighed on the banks, becoming, in industry parlance, “suspended business”.

The WSJ notes that banks agreed to underwrite these loans “largely because the lure of banking the world’s richest person was too attractive to pass up.” Now that seems like a costly mistake unless I can extract interest payments from X plus a principal repayment once the loans mature.