Most of this stuff is common knowledge but Reuters ties it together nicely. The short version is that PIMCO, Goldman Sachs and others had teams that were buying securities for the Fed. On another floor, separate teams were correctly guessing what their walled-off coworkers would buy.
Among other controls, the spokesman said, the New York Fed required the firms to physically separate trading staff from other employees. They also had to ensure that no information flowed between the traders making purchases at the New York Fed’s direction and other traders at the firms. Each firm had to certify in writing that it was in compliance with the required controls and was subject to internal and external audits.
The article shows how PIMCO made massive, outsized and correct bets on what the Fed would buy, netting $10 billion.
Oh, and after Greenspan retired from the Fed, PIMCO hired him as a consultant. Financial terms were not disclosed but Bill Gross said he helped them earn ‘billions’.