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Greenspan Signs On With Mortgage Profiteer

Ex-Fed honcho will advise hedge fund

By Kevin Spak,  Newser Staff

Posted Jan 15, 2008 12:20 PM CST

(Newser) – Paulson & Co. made a fortune as the mortgage crisis unfolded, and now the hedge fund has hired the man some say caused the meltdown. Alan Greenspan, whose actions as chairman of the Fed have been under fire lately, today agreed to advise the firm, which saw one fund rise 590% on bearish housing plays and is betting things get worse, the Wall Street Journal reports.

Critics say Greenspan egged on the current crisis, holding rates too low in 2003 and 2004, but John Paulson doesn’t blame him. “It’s easy to look back and do Monday-morning quarterbacking,” the fund's founder said. “The decisions he made at the time were right.” Paulson is Greenspan’s third advising client, and all three profited from bearish mortgage outlooks.

Former chairman of the U.S. Federal Reserve Alan Greenspan speaks during the 91st LIMRA International Annual Meeting, Tuesday, Oct. 30, 2007, in Boston.(AP Photo/Bizuayehu Tesfaye)
Former chairman of the U.S. Federal Reserve Alan Greenspan speaks during the 91st LIMRA International Annual Meeting, Tuesday, Oct. 30, 2007, in Boston.(AP Photo/Bizuayehu Tesfaye)   (Associated Press)
In this file photo provided by the International Monetary Fund, Alan Greenspan, former Federal Reserve chairman speaks at the Per Jacobsson Foundation Lecture on Oct. 21, 2007, in Washington.  (AP Photo/International Monetary Fund, Stephen Jaffe, file)
In this file photo provided by the International Monetary Fund, Alan Greenspan, former Federal Reserve chairman speaks at the Per Jacobsson Foundation Lecture on Oct. 21, 2007, in Washington. (AP Photo/International...   (Associated Press)
Former chairman of the U.S. Federal Reserve Alan Greenspan speaks during the 91st LIMRA International Annual Meeting, Tuesday, Oct. 30, 2007, in Boston.(AP Photo/Bizuayehu Tesfaye)
Former chairman of the U.S. Federal Reserve Alan Greenspan speaks during the 91st LIMRA International Annual Meeting, Tuesday, Oct. 30, 2007, in Boston.(AP Photo/Bizuayehu Tesfaye)   (Associated Press)
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