The battle between two supposed directors of the Consumer Financial Protection Bureau is making for compelling optics but only seems to be delaying a tidal shift at the powerful consumer watchdog.

Mick Mulvaney, Donald Trump’s budget director and now his choice as acting director of CFPB, made a conspicuous effort on Monday to show he was firmly in control of the bureau. Meeting reporters, he promised a new approach at the agency, which he called example of “bureaucracy gone wrong”. Earlier, he arrived at work with doughnuts for the staff.

Leandra English, who was elevated to deputy director of the bureau late last week by Richard Cordray upon his resignation, sent staff an email offering Thanksgiving wishes – hours after asking a judge to block Mulvaney from taking over. Mulvaney sent his own email telling staffers to “disregard” any directions from English.

Even if English wins in court, the clock is ticking on the bureau’s current direction. Mulvaney, and probably any Trump appointee, is certain to roll back the bureau’s aggressive stance and be more accommodating to banks and other financial companies. In his first move in the interim role, Mulvaney ordered a 30-day freeze on any potential new regulations or hiring. He was also unrepentant in his criticism of the bureau, which dates back to his time in Congress.

In requesting a temporary restraining order against Mulvaney, English cited the Dodd-Frank Act, which created the CFPB. She said that as deputy director, she became the acting director under the law and argued that the federal law the White House contends supports Trump’s appointment of Mulvaney does not apply when another statute designates a successor.

The case, at the US district court of Washington DC, is being handled by Judge Timothy Kelly, a Trump appointee recently approved by the Senate. Judge Kelly did not make any ruling on the case at an initial hearing on Monday, saying he wanted to wait to hear the government’s argument first.

The Trump administration defended its position in a court brief filed late on Monday.

It said that both the justice department’s office of legal counsel and the general counsel of the CFPB “agree that the president of the United States lawfully designated John M Mulvaney as the CFPB’s acting director pursuant to the VRA (Vacancies Reform Act).

“Plaintiff’s arguments to the contrary rest on a bureaucratic sleight-of-hand effected on the final day of former CFPB director Richard Cordray’s tenure,” it said, alluding to English’s elevation by Cordray to the agency’s top job on an acting basis.

Mick Mulvaney, center, leaves the Consumer Financial Protection Bureau in Washington on Monday morning. Photograph: Jacquelyn Martin/AP

Cordray was appointed CFPB director by Barack Obama and has been long criticized by congressional Republicans for being overzealous, but lauded by consumer advocates for aggressively going after banks for wrongdoing. For instance he fined Wells Fargo $100m for its aggressive sales practices. He was one of the last Obama-era political holdouts.

Cordray said on Monday that the issue should be settled by a court.

“The law says that I shall appoint the deputy director, and I did so,” he said.

Former congressman Barney Frank, a Massachusetts Democrat, told MSNBC late on Monday the drafters of Dodd-Frank worked intentionally to isolate the consumer agency from the pressures of politics and said that was why it created a system for succession as part of the law.

Mulvaney spoke to reporters at the CFPB the end of the day, which included meetings with staffers and reviewing issues currently facing the bureau.

“This agency will stay open,” he said. “Rumors that I’m going to set the place on fire, or blow it up or lock the doors are completely false. I am a member of the executive branch of government; we intend to execute the laws of the United States, including the provisions of Dodd-Frank.”

However, bank lobbyists are expecting a softer hand from Mulvaney and any Trump appointee. The CFPB has long been criticized by Republicans and the banking industry as an agency with too much power and too little accountability.

“We need someone who can be for consumer protections but also understand how a bank operates,” said Richard Hunt, CEO of the Consumer Bankers Association, a lobby and trade group for the nation’s biggest retail banks.

The administration’s case in the acting director controversy rests on the Federal Vacancies Reform Act, which gives the president authority to appoint temporary department heads while their permanent nominees are approved by the Senate.

While the Vacancies Act does allow a president to appoint acting directors at agencies like the CFPB, the Dodd-Frank Act has specific language that seems to indicate that only a deputy director can step into the acting director position.