You are required to be pledged to the right Faction in order to use an Exotic Faction Class Item. You recently switched Faction Allegiance, which causes your Exotic Faction Class Item to "not work". Even while still equipped, it is not counted, therefore you have 0 Defense in your Class Item Slot, which caused your Light Level to drop. Equipping another Class Item will fix this issue until you can switch your Allegiance back. More information is found here: https://www.bungie.net/7_Faction-Pledge-is-required-to-use-Exotic-Faction-C/en/Help/Article/13608