A Federal Reserve Board proposal to enact strict limits on how much credit exposure the largest banks can have to a major counterparty has significant design flaws that could raise the cost of credit, according to new analysis by the Clearing House.

Mortgages outperformed over the week based on expectations that the Federal Reserve will initiate QE3 at its September meeting and a drought in supply.

The September expiration date for the Small Business Administration's (SBA) secondary market program for the first lien position means that first mortgages will no longer be eligible for a government guarantee.

Citigroup plans to cut roughly 350 additional jobs this year from its securities division, which includes investment banking and trading, according to published reports.

The Consumer Financial Protection Bureau (CFPB) published its report on the state of private student lending today. The report showed that loans in the sector are increasingly being underwritten to stricter criteria that benefits both lenders and borrowers.

The U.K. RMBS pipeline added a £680 million ($1.06 billion) transaction that is backed by a pool of prime U.K. residential mortgage loans originated by the former Britannia Building Society and the Co-operative Bank plc.

Market participants believe the availability of new mortgage production is an obstacle to QE3 despite Federal Reserve Chairman Ben Bernanke's supportive comments in his semi-annual congressional testimony on Tuesday, BNP Paribas MBS analysts said in a report released yesterday.

The standardization of future CLOs' defined terms and structural features can hasten the sector's primary issuance process, Fitch Ratings said in a note released this morning.

A proposal by San Bernardino County to use eminent domain to seize, and then restructure, underwater private-label mortgages would result in more than just losses to private investors. Fannie Mae, Freddie Mac and the Federal Home Loan Banks are also in major investors in private-label securities and they too would suffer if the county took over what is estimated to be 150,000 underwater mortgages.

Citigroup analysts in their Consumer ABS Weekly published today examined the near-term impact of the interchange settlement on credit card master trusts and determined it was marginal.

The Securities Industry and Financial Markets Association (SIFMA) has reached a consensus on the issue of cities using their power of eminent domain to refinance underwater mortgages (using reducing principal reductions) that reside in private-label MBS, saying it will foul up the securitization process.

The Consumer Financial Protection Bureau's (CFPB) first-ever enforcement action Wednesday — hitting Capital One over card marketing practices — carried a pair of messages for the industry as a whole.