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Donald Trump is set for a courtroom showdown over control of the top US consumer finance watchdog after its deputy director filed a lawsuit to block the president from putting an arch-critic of the agency in charge.

Leandra English, who argues she has authority to take control of the Consumer Financial Protection Bureau herself, took the legal action on Sunday to prevent the White House installing Mick Mulvaney as acting director.

Her move on Sunday adds a new twist to what is shaping up to be an extraordinary power struggle. The CFPB has been run by Richard Cordray since it was established by the Obama administration after the previous financial crisis.

The uncertainty over its leadership leaves the agency, admired by consumer advocates but loathed by Wall Street, in turmoil. Both Ms English and Mr Mulvaney, who has described the agency as a “sick joke”, are expected to appear at the bureau’s Washington headquarters on Monday.

The two officials, who have radically different views on the CFPB’s future, both claim to have legal authority to take charge until the Senate approves a permanent head — a process that could take months.

While the president has clear authority to nominate a permanent successor to Mr Cordray, lawyers said it was less clear if he could install a leader in the interim. The post-crisis Dodd-Frank legislation that created the agency is open to interpretation.

In her lawsuit, filed at the US District Court for the District of Columbia, Ms English highlighted a section of Dodd-Frank that says the deputy director “shall serve as acting director in the absence or unavailability of the director”. 

However, the justice department’s Office of Legal Counsel issued an eight-page opinion over the weekend supporting Mr Mulvaney’s appointment. It said the legislation did not specify what happened when the director vacated his position, giving the president authority to appoint a temporary leader under the Vacancies Reform Act.

President Trump has waded into the row, describing the CFPB under Mr Cordray as a “total disaster”. “Financial institutions have been devastated and unable to properly serve the public,” said Mr Trump. The administration would “bring it back to life”.

Mr Cordray extracted about $12bn from the financial industry in penalties and consumer compensation during his six-year tenure. 

Just hours before he left on Friday, the outgoing director promoted Ms English to the position of deputy director, a move he argued left her placed to run it in his absence. A senior Trump administration official said the outgoing chief had sought to “provoke” a legal fight.

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