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I've ranted before about the ridiculous nature of the Consumer Financial Protection Bureau (CFPB) a holdover from the Obama era.

It's primary gimmick is the following: it isn't dependent on funding from US Congress. At one time, it even used to be independent of the US Executive Branch until a court ruling in 2016 that the US President could fire the head of the agency.

A three-judge panel on the 5th Circuit Federal Court of Appeals ruled this week that the CFPB's structure is unconstitutional because Congress has no control over the agency's budget, which is funded entirely by the Federal Reserve. Under the terms of Dodd-Frank, the CFPB is entitled to receive a budget totaling up to 12 percent of the Federal Reserve's annual operating expenses, and the Federal Reserve is not allowed to refuse the CFPB's requests for funding.

Now, that funding model has been used to reverse a ruling by the CFPB as unconstitutional with the potential to put all its rulings since formation into question on the same constitutional basis.

Why it matters: The reasoning behind the ruling, if upheld, could potentially invalidate all the rules enacted by the CFPB over its 11-year existence — including regulations underpinning the U.S. mortgage system.

This is one of the big reasons I oppose the passing of bad law even when it serves a concrete good. It can take a long time to fix the massive problems that such law brings.

And note that a key argument by the court was that there was no precedent for the CFPB's unconstitutional structure. If there had been other agencies with similar setups, this could have been very hard to overturn. Similarly, the CFPB is a precedent for future breaking of the US Constitution along these lines. Without the ruling, there would have been a stronger case for future misdeeds of this sort.