I don't know this side effect of the powerful Cre - causing genomic instability. Here is a paper published in 2001 describing it and their way to bypass it.
Mol Cell. 2001 Jul;8(1):233-43.
Self-excising retroviral vectors encoding the Cre recombinase overcome Cre-mediated cellular toxicity.
Silver DP, Livingston DM.The Dana-Farber Cancer Institute, Harvard Medical School, Boston, MA 02115, USA.
The Cre-lox system is often used to manipulate sequences in mammalian genomes. We have observed that continuous expression of the Cre recombinase in cultured cells lacking exogenous lox sites caused decreased growth, cytopathic effects, and chromosomal aberrations. Cre mutants defective in DNA cleavage were not geno- or cytotoxic. A self-excising retroviral vector that incorporates a negative feedback loop to limit the duration and intensity of Cre expression avoided measurable toxicity, retained the ability to excise a target sequence flanked by lox sites, and may provide the basis of a less toxic strategy for the use of Cre or similar recombinases.
"the toxic effect of Cre is not cell specific or GFP dependent. Furthermore, toxicity does not require the presence of exogenous lox sites."
"it appears that active Cre can cause significant toxicity when introduced into a variety of cell types, that this toxicity is barely dependent upon the DNA cleavage function of the recombinase, and that it occurs in cells lacking ectopically introduced lox sites."
"prolonged exposure to a Cre protein capable of strand scission leads, directly or indirectly, to genetic instability."
"Attempts to apply the Cre-lox system to cells in culture revealed that chronic Cre expression is 'toxic' to a variety of tissue culture cells. Toxicity required the strand-cutting ability of the recombinase and was associated with aneuploidy and a high incidence of chromosomal aberration. Other groups have also noted aspects of Cre toxicity: Cre appears to be toxic when expressed in postmeiotic spermatids of transgenic mice (Schmidt et al., 2000), and growth-suppressive effects of Cre expression have been reported (de Alboran et al., 2001)."

To obtain this "Hit and Run" Cre retroviral vector, go to Harvard PlasmID and search for pHR-MMPCreGFP.
After reading this paper, I realize that in my attempts to make red fluorescence tagged Cre, my initial "fault" design which has LoxP sites flanking the Cre is actually not that bad - although the correct way is to have single Lox511 site in the 3' U3 region which will generate two Lox511 sites after integration. That time, I could not grow the clone which made me realize my design is fault. As noted by the authors for Hit&Run-Cre "fussy to grow; try RecA+ strain and/or growth for 1 hour without selection to give it a boost".
What does RecA+ means?
from protocol-online.org
RecA is an endogenous ssDNA binding protein of E. coli. It plays a critical role in homologous recombination (also a part of DNA repair). RecA helps the initiate ssDNA strand invasion of dsDNA and it is RecA which causes the further unwinding that allows branch migration.
Homologous recombination (or any recombination) is bad news for the plasmid.
Nearly all cloning strains have the recA gene knocked out (recA-). However some protein expression strains (such as BL21 cells) retain the recA as a functional gene because recA mutants grow much more slowly.
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