Fine Gael leader Enda Kenny said bosses at major financial institutions snubbed their noses at Brian Cowen because he oversaw the light-touch attitude towards regulation while Finance Minister.

Mr Kenny claimed revelations that ex-Irish Nationwide chief Michael Fingleton had been paid 221,000 euro for his final four months in the job showed the Government was powerless to act against senior bank officials.

Mr Cowen hit back claiming the board of the Building Society would pursue all matters also added he recognised the insensitivity of the 1.5 million euro pension top-up to Bank of Ireland chief Richie Boucher.

But Mr Kenny said: "What's happened here Taoiseach is that the banks have snubbed their noses at the high office that you occupy.

"They treat you and your office with utter disrespect and the reason for that is because of your complicity in overseeing light regulation or no regulation in the four years that you were over there in the Department of Finance."

Mr Cowen said all matters in relation to the financial institutions would be dealt with through a banking inquiry and that everything would be done by the management and board of Irish Nationwide to pursue money paid to Mr Fingleton.

The Taoiseach said the Government could not step in and strip Mr Boucher of his controversial 1.5 million euro pension top-up.

He also said he did not hold a brief for the bank.

"Nor am I here to justify it. We all recognise the insensitivity, as regards how ordinary people regard it, and people in the street would regard it in relation to how they view their own particular challenges or difficulties," Mr Cowen told the Dail.