Hedge fund BlueMountain has hired a former top U.S. central banker who made headlines by suggesting that raising interest rates could help curb market speculation as a consultant.

Jeremy Stein, who was a Federal Reserve Board governor for two years and currently teaches economics at Harvard, will advise the $20 billion hedge fund on monetary policies, financial regulation and risk, BlueMountain said in a statement.

At the Federal Reserve, Stein said central bankers should place greater emphasis on financial stability, arguing they could snuff out developing bubbles and excess speculation by raising interest rates. For years, the Fed has stuck by its accommodative policy stance to help revive economic growth.

Stein resigned from the Fed board nearly a year ago.

BlueMountain, a credit-oriented fund founded in 2003, made gains as well as headlines three years ago by taking the other side of the so-called London Whale trade in which JPMorgan Chase & Co lost roughly $6.2 billion. It is run by Andrew Feldstein, who played pick-up basketball with Harvard Law School classmate President Barack Obama and fellow Harvard Law School alumnus Stephen Siderow.

Big-name hedge funds, including Paulson & Co., have made a practice of hiring former central bankers and other government officials as their funds grow in size and scope.