US President Barack Obama said on Wednesday that the American International Group (AIG) "offends our values" by paying lavish bonuses to its executives.

"It's hard to understand that a company that is relying on extraordinary assistance from taxpayers to keep its doors open would be paying anybody lavish bonuses," Obama said at a town hall-style gathering in Costa Mesa of Orange County near Los Angeles.

"It goes against our most basic sense of what's fair and what's right," Obama said. "It offends our values."

The town hall meeting was the first stop on Obama's two-day visit to Southern California, during which he is expected to emphasize his economic stimulus plan, including the US$787-billion package approved by Congress, his administration's efforts to help homeowners facing foreclosure and small-business owners needing loans.

In his speech, Obama took full responsibility for the millions of dollars in retention bonuses paid to the insurance company's executives shortly after it received billions of dollars from the taxpayers via a federal bailout.

"Listen, I'll take responsibility. I'm the president. We didn't draft these contracts. We've got a lot on our plate, but it is appropriate when you are in charge to make sure that stuff doesn't happen like this."

Obama also tried to offer words of hope for a state facing high unemployment, teacher layoffs and other financial problems.

"One out of every 10 Californians is out of work right now," he noted. "You've got one of the highest foreclosure rates in the nation. Budget cuts are threatening the jobs of thousands of teachers across the state. But here is what I want you to know -- we are not only going to make it through this crisis, we are going to come out on the other side a stronger and more prosperous nation."

After making brief remarks that were repeatedly interrupted by fans yelling "we love you" and chanting "O-bam-a," the president answered questions for nearly an hour.

When asked how the federal government's stimulus package will help teachers who are in danger of losing their jobs, Obama said the funds are intended to retain teachers. However, he said keeping teachers in their jobs is just one part of the educational equation.

"We've got to provide better teacher training. There are teachers who may not know their subject matter as well as they should. They've got to be given more time for professional development. We've got to have more flexibility, I believe, in terms of how we reward teachers," Obama said.

The president also called for actions to ensure that employee wages keep pace with the cost of living, something that did not happen over the last decade.