TheStreet.com TV Recap: Distressed-Debt Gold Mine

The defaulted-loans business is "fabulous" and "much better than the competitive nature of subprime," Jim Cramer said on TheStreet.com TV's Wall St. Confidential Web video Thursday.

Back when Cramer was working at Goldman Sachs(GS Quote), American Southwest Mortgage Group was a savings and loan company that was being defaulted.

At that time there was an opportunity to sell $1 billion worth of American Southwest mortgages, and even though the paper was worthless, "the number of buyers that you saw ... was remarkable," he told Gregg Greenberg, the host of Wall St. Confidential.

Today, Bear Stearns (BSC Quote) indicated that that's what it's doing, Cramer said. "They are moving mortgages to distressed debt, marking them up really big and giving you a better coupon.

"The brokers are making a huge amount of money on this," he continued. Most people are convinced there is no way the brokers aren't lying here, but "having sold paper on the fly of defaulted, bankrupt and criminal savings and loans, I can tell you that's a lot better than selling paper that's involving people who own homes."

When Greenberg asked Cramer to rank his top brokers in light of the subprime concerns, Cramer said that because "there is a perspective that mortgage is bad and people haven't woken up to the fact that it could be good, Goldman Sachs is No. 1."