Yes, Pussy had been an informant since the mid 90's. During the entire second season storyline of Pussy I did not like it. He was still talking to the feds and giving them the wrong information, but it seems he felt Tony would overlook him talking to the feds by giving them incorrect information. Even with that, Pussy was laying the blame on other active members of the family, even tony could not turn a blind eye to that and it was right in front of Tony the entire season until he was confronted with it during his sickness.