TheStreet.com TV Recap: JP Morgan Coup

The most notable part of student loan lender Sallie Mae's $25 billion buyout is JP Morgan's (JPM) participation in it, Jim Cramer said on TheStreet.com TV's Wall Street Confidential Web video Monday.

"JP Morgan has moved aggressively into student loans" and may "pretty much have a monopoly" in the area once the deal is completed, he told Gregg Greenberg, the host of Wall Street Confidential. "That's a great niche business for them."

Cramer said he believes the transaction is "remarkable," particularly for the fact that First Marblehead (FMD) is getting "crushed" because of it. First Marblehead plunged Monday as investors worried that JP Morgan and Bank of America will pull their business now that they're poised to take big stakes in rival Sallie Mae

"Jamie Dimon is really starting to make an impact and I believe JP Morgan is still very cheap," he said.

Further, Chris Flowers of private equity firm J.C. Flowers is leading the deal. "I worked with him at Goldman Sachs and he's one of the most exacting people I've ever seen," Cramer said. "He only gets involved when there are real home runs, not doubles or triples."

"Student loans are a very big area of lending," he continued. "President Bush has really tried to get this so that it's done by private banks."

Sallie Mae's smaller competitor, Citibank (C)-owned Student Loan Corp, is "also a natural to be acquired," Cramer said.

Pointing out Mark DeCambre's TheStreet.com article, Private Equity Digs Deep, published earlier this morning, Cramer said he believes Phelps Dodge would likely have been purchased by a private equity firm, had Freeport-McMoRan (FCX) not bought it.

"One of the things we see over and over again are these 8, 9 10, 11 times earnings companies being bought by private equity," he said. "Money is being printed everywhere and that is causing lots of people to buy lots of different things. It's interesting that the inflation side of the equation has vanished for now."

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