Greenspan joins Paulson hedge fund

The hedge fund that has profited most from the subprime mortgage meltdown has hired the man who is widely blamed for causing it - former Federal Reserve chairman Alan Greenspan. The 81-year-old is set to join the Paulson & Company as an adviser on economic issues and monetary policy. No one will say what his salary will be, but under the terms of the agreement Greenspan will not advise any other hedge fund while he is working for Paulson.

Last year, the New York-based Paulson’s bets against the US mortgage market earned it $15bn while the company's founder, John Paulson, netted a personal pay-day of between $3bn and $4bn. Meanwhile Greenspan has been criticised for sowing the seeds of the current 'credit crunch' by keeping interest rates too low for too long.

In his new role - his third major advisory role since taking retirement two years ago - Greenspan will advise Paulson on the global financial markets. Despite his retirement, Greenspan - who was chairman of the Federal Reserve Bank for 18 years - still has a massive influence on the market.

"Few people, if any in the world, have the experience with, and depth of understanding of, global financial markets of Mr Greenspan," Paulson told the Financial Times. More cynical commentators are suggesting that the role might be a ‘thank you’ from Paulson to Greenspan for helping his hedge fund reap the profits from the subprime debacle.