By the time George W. Bush left the White House, the “free”-market kleptocracy over which he had cheerily presided had transformed the American economy into a toxic-waste dump.

With breathtaking arrogance and an almost sociopathic capacity for self-delusion, our proud financial elite, assisted by Republicans and Democrats alike, had driven the U.S. financial system and the world to the brink of a second Great Depression.

Justifiably panicked, Congress had passed the Emergency Economic Stabilization Act of 2008 in October of that year, handing the Bush administration’s Treasury Department $700 billion with which to get the U.S. financial system back into working order. (The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 reduced the amount to $475 billion.)

The original law created the Troubled Asset Relief Program (TARP), an umbrella designation for more than a dozen other umbrella programs focusing on various aspects of an economic system in deep distress. TARP was operational but in many ways still taking shape when Barack Obama became president.

I’ve always imagined Bush tossing Obama the keys to the White House and saying something like, “Here, YOU fix it.”

Three and a half years later, the economy is far from fixed. Building on efforts begun in the waning months of the Bush presidency and using TARP and other initiatives, the Obama administration beat back the threat of a second Depression. But the monumental significance of that accomplishment has dimmed with time — and with the persistent after-effects of a recession that officially ended in June 2009.

Today, a stabilized American economy is growing, but without much conviction. Jobs are still scarce. People of all ages still fear for their financial security and their families’ futures. Consumers lack confidence and consume cautiously. Too few companies take advantage of record-low interest rates to borrow for expansion or use the wads of cash they’ve been amassing and stashing away. And the wounded real estate segment still hobbles along, despite promising signs in some regions, including the Midwest.

The economy, of course, is the crucial issue in a presidential election campaign that is already revved up and already obnoxious. But both Democrats and Republicans know history’s lesson: Except in times of war, economic conditions almost always determine elections. 

The TARP programs, run out of the Department of the Treasury led by Secretary Timothy Geithner, seem to have done right by at least some of the banks. Of 700 financial institutions that received TARP program funds, almost 400 have repaid taxpayers with interest as of June 30, 2012. About 40 percent of those, however, paid back one TARP program with money with another TARP program. That’s an indication of continuing financial shakiness, especially at smaller community banks, according to recent quarterly reports by the special inspector general charged with monitoring the TARP programs.

But the biggest banks and bank holding companies have done extremely well. According to Federal Reserve System data, five entities — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs Group, all of which received and paid back TARP rescue funds — now control $8.5 trillion in assets. That’s 40 percent more than they had before the crisis. If they were so important to the financial system then that they could not to be allowed to fail, what are they now?

Obama’s and Geithner’s most glaring TARP problems, however, have involved the law’s mandate to assist homeowners (and financial institutions) battered by the effects of the financial crisis on real estate values and home mortgages.

The administration launched its first TARP homeowner assistance programs in February 2009, less than a month after Obama took office. But as a devastating article by National Journal reporters revealed earlier this year, the program ideas were so hastily conceived and so dauntingly complex that the programs barely func tioned at all.

Since then, the Treasury Department has kept at it — introducing, developing and operating 17 different programs, some of which are aimed at reducing loan principal amounts, others at refinancing mortgages at lower interest rates, still others targeting second liens. The programs have been modified and tweaked as recently as June.

Yet of the $29.9 billion made available for TARP’s various Making Home Affordable programs, only $3.4 billion had been spent as of June 30. Of the broader total of $45.6 billion allotted for all TARP housing assistance, the Treasury Department has distributed only $4.5 billion, and some of that sit in the accounts of state housing agencies.

Some observers blame these failures on Geithner, an economist who has spent his entire career in public service at the Federal Reserve Bank of New York, the International Monetary Fund and the U.S. Treasury Department. Whatever his motives, Geithner’s TARP-related decisions have consistently indicated deference to the interests and concerns of major financial institutions, rather than those of ordinary homeowners.

Which brings us to politics.

On May 11, Republican presidential candidate Mitt Romney released a campaign document attacking the Obama administration for the high number of home foreclosures since he took office. The release coincided with an Obama visit to Nevada, a battleground state whose real estate sector has suffered terribly from the financial crisis.

The Romney material made no mention of the candidate’s recorded remarks some months earlier to the editorial board of the Las Vegas Review-Journal. “Don’t try to stop the foreclosure process,” he told the board. “Let it run its course and hit the bottom.” He reiterated that position in a Republican debate, criticizing Obama because he tried to “hold off the normal market process, the foreclosure process.”

Romney’s official 160-page economic plan, released on Sept. 1, 2011, lists 59 proposals. Not one addresses housing or foreclosures. His prescription for reining in the economic abuses inflicted on Americans by the financial sector? Repeal the Dodd-Frank financial reform law, a weak measure larded with loopholes. In other words, Romney, a creature of the financial industry, leaves homeowners at the mercy of financial markets that police themselves.

Self-policing? In recent weeks and months, we’ve learned that major banks rigged interest rates to benefit their own investments, rigged questionnaires to get non-public information from analysts for trading advantage and rigged foreclosure proceedings by using servicers that forged documents for use in home foreclosures.

Just last month, HSBC Holdings—Europe’s largest bank, which also operates in the U.S.—admitted it had laundered money for Mexican drug cartels, Saudi banks with terrorist ties and Iranian interests seeking to bypass strong U.S. sanctions.

Earlier this week, HSBC announced that its net profit was down because it set aside funds to pay restitution and fines in connection with various kinds of misconduct.

HSBC’s net profit fell by about 8 percent. To $8.2 billion. For the first six months of the year.

Self-policing pays well.