The five best-paid hedge fund managers – who between them made $12.6bn last year, even as the financial world began to crumble around them – were hauled before the US Congress yesterday and assailed over their huge salaries, their tax perks and their contribution to the credit crisis that has engulfed the globe.

In a piece of public theatre that reflected not just the present crisis, but also a decade or more of vastly increased income inequality, the five men declared themselves innocent of causing the market meltdown and insisted that their riches reflected hard work and investment insight.

As one Congressman, Elijah Cummings, put it, "these are five citizens who have more money than God", and he proceeded to tear into them over rules that have allowed them to pay a fraction of the tax an ordinary teacher, firefighter or plumber might pay.

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Philip Falcone, whose Harbinger Capital is one of the world's biggest hedge funds, stressed his humble beginnings as one of nine children living in a three-bedroom home in Minnesota. "My father was a utility superintendent, my mother worked in a local shirt factory," he said. "I take great pride in my upbringing and it is important for people to know that not everyone who runs a hedge fund was born on Fifth Avenue."

Although many hedge-fund managers live lives of conspicuous consumption, they prize their privacy as tightly as they cling to the rules – or lack of them – that enable them to keep their trading strategies secret. Their testimonies under oath in the giant, high-ceilinged, oval committee room on Capitol Hill yesterday took them out of their natural habitat, and for all their status as masters of the universe, several seemed intimidated.

John Paulson – who suddenly joined the ranks of billionaires after betting in 2005 that Wall Street was awash with overpriced investments in mortgages that millions of Americans would ultimately be unable to pay – was told more than a dozen times to speak up so he could be heard. Jim Simons, the mathematical genius whose Renaissance Technologies is among the most respected fund groups in the world, was told to stop "mumbling".

The hearing was the latest in what wags on Wall Street are calling the Waxman Witch Trials. The House oversight committee, whose chairman, Henry Waxman, has subpoenaed all the main players in the crisis, previously humbling Dick Fuld, chief executive of collapsed Lehman Brothers, and the bosses of credit rating agencies who, according to Mr Simons, "allowed sow's ears to be sold as silk purses".

Mr Waxman said yesterday: "Our four previous hearings have looked at failure. Today's hearing has a different focus. The five hedge fund managers who will testify today have had unimaginable success."

Across the world, hedge funds have been blamed for their role in the collapse of banks, many of which suffered in their final stages from a crisis of confidence which some managers said was caused by short-selling of the company shares. Yesterday's panel, to a man, described the hedge funds who sell short (that is, place bets on a share price going down) as helping bring efficiency to markets by highlighting bad companies, but most agreed more regulation of the industry would be desirable, as would greater disclosure of their positions.

But the pugnacious Ken Griffin, of Chicago-based Citadel group, held out against the tide. Disclosing more would "be like asking Coca-Cola to disclose its secret formula". And he told Congressmen not to repeat mistakes from the past, when political talk of greater regulation pushed the derivatives market largely overseas. "It breaks my heart," Mr Griffin said, "when I go to Canary Wharf and look at the thousands and thousands of highly paid jobs in the London derivatives market, jobs that belong in America."

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George Soros, one of the hedge fund industry's elder statesmen, said he had come out of retirement to manage his fund, in the face of a financial tsunami that was threatening substantial losses to his personal fortune.

The philosopher, the geek, the quiet man, the player and the buyer: The men behind the hedge funds

George Soros

Soros Fund Management

Paid last year – $2.9bn

Famed as "the man who broke the Bank of England", after netting more than $1bn by betting the pound would fall out of the Exchange Rate Mechanism in 1992, the 78-year-old has attacked unfettered free market capitalism as being at the root of today's crisis.

Jim Simons

Renaissance Technologies

Paid last year – $2.9bn

The world's most expensive hedge fund manager, 70, charges clients 5 per cent a year, plus a whopping 44 per cent of returns beyond a certain level. His fund runs "black box" programmes that harvest tiny profits from millions of automated trades.

John Paulson

Paulson & Company

Paid last year – $3.7bn

Having run an obscure fund for 14 years, the 52-year-old last year made what rivals called "the greatest hedge fund trade of all time". As a result he traded up in the Hamptons, the upstate playground for New Yorkers, and bought a lakeside compound for $41m (£27.8m).

Philip Falcone

Harbinger Capital Partners

Paid last year – $1.7bn

The 47-year-old made his fortune trading junk bonds in the Eighties. His firm was founded in 2001 and made another fortune last year betting against sub-prime mortgages. His two funds boasted 114 and 176 per cent returns in 2007.

Ken Griffin

Citadel Investment Group

Paid last year – $1.5bn

Last year, it looked as the 40-year-old might become one of the world's biggest financial players after buying up so many distressed funds, banks and brokers. Now he is fighting to save his fund after losing 35 per cent of it this year.