Obama told "The Tonight Show" host the payments raise moral end ethical problems - and vowed again to try to recoup the cash for taxpayers.
"We're going to do everything we can to get these bonuses back", he declared.
Leno asked Obama what he thought when his staff first advised him of the payments, many made to traders in the very division that brought American International Group to ruin.
"'Stunned' is the word," Obama replied in a taped appearance on "Tonight." He said he found it hard to fathom how anyone would accept lavish payments in those circumstances. "People just had this sense of entitlement. We must be the best and the brightest."
But Obama staunchly defended Treasury Secretary Timothy Geithner, who's increasingly come under fire for failing to block the bonuses.
"I think Geithner is doing an outstanding job," Obama said. "He is a smart guy. He is a calm and steady guy. I don't think people fully appreciate the plate that was handed him."
Obama added Geithner's carrying on "with grace and good humor. He understand that he's on the hot seat."
Too many in Washington are trying to figure out who to blame for things - when they should be focused on fixing them, Obama said.
According to NBC, Obama was the first sitting president ever to appear on "The Tonight Show." He'd already appeared twice as a candidate.
Obama spoke with little interference or challenge from Leno, who clearly was enthused about snaring the president as a guest and pronounced it "one of the best nights of my life."
Leno veered away from politics and into the personal toward the end of the 35-minute interview, asking, "How cool is it to fly on Air Force One?" and when Obama daughters Sasha and Malia would get their pet dog.
"This is Washington. That was a campaign promise," Obama replied to audience laughter. "No, I'm teasing. The dog will be there shortly."
The new pet will be in place after he returns from a NATO meeting, Obama said.
The White House bowling alley remains in place, Obama said, bragging that he rolled a 129-point game ("Like the Special Olympics or something," he said), but a basketball court is a priority.
In his opening monologue, Leno said lots of people were surprised Obama would come on NBC - figuring he'd be tired of big companies on the brink of disaster with a bunch of overpaid executives.
Leno also joked about the dismal state of the economy, saying it's so bad Obama flew to California on Southwest Airways - making nine stops.
In recent years, a "Tonight Show" appearance has become a key humanizing touch for aspiring presidents. But its history of such appearances goes back to 1960, when then-Sen. John F. Kennedy came on the show to chat with Jack Paar.
Obama himself has already made two non-presidential appearances - on Dec. 1, 2006, and Oct. 17, 2007.
The White House scheduled the appearance as part of a broader outreach to promote Obama's agenda - one that's already had him on ESPN's "SportsCenter" this week and includes a "60 Minutes" interview airing Sunday, plus a prime-time news conference Tuesday.
But on ESPN, the talk was mostly about basketball. The First Fan filled out an NCAA tournament bracket - picking North Carolina to defeat Louisville in the final. But recalling he picked the Tar Heels last year, he joked, "This year, don't embarrass me in front of the nation, all right? I'm counting on you."