It's ironic that great American financial institutions—Citigroup and Merrill Lynch among them—are being bailed out by sovereign wealth funds from places like Kuwait, South Korea, and Abu Dhabi. For years, these institutions lobbied for free trade, arguing that this was a globalizing world, that free trade was the only path to prosperity, and that critics of free trade were fearmongers who wanted to put up walls.

You know the story. During the Clinton years of the early 1990s, as free trade debates swept Washington, Citigroup was a powerful cheerleader for the North American Free Trade Agreement. Robert Rubin, then a recent Goldman Sachs alumnus, was the chairman of the newly created National Economic Council and the biggest proponent of freer trade. As Washington found itself in a lobbying fight of epic proportions, the financial institutions weighed in on the side of free trade.

Now look what has happened. All of these houses are desperately seeking capital from sovereign wealth funds, which are, let's face it, the opposite of free trade—a government presence in the marketplace in its purest forms. It's amusing too that Alaska, which keeps sending the most conservative politicians to Washington, is the only state with a sovereign wealth fund. So the government interferers are bailing out the free traders.

It's not just that sovereign wealth funds are anathema to a free-market economy. Many of the funds are run by protectionist societies like China, and to a lesser extent, South Korea. For years we were told that protectionism could only be a path to ruin, and here we find ourselves being bailed out by the protectionists.

Given the state of American financial institutions, we ought to be grateful that someone is riding to the rescue even if it proves to be only a temporary fix. I have no objection against sovereign wealth funds. If a country is smart enough to accumulate a big bad surplus and wants to sprinkle it around the globe looking for great returns, I'm not, as the citizen of a debtor nation with a weak currency, going to start complaining.

What would behoove the free traders out there, the people who reflexively back every deal that comes before Congress, is to think hard about all of their bromides on what produces wealth. Obviously, there are a lot of countries that don't adhere to free-market principles and are doing very well, so well that our most prestigious banks go to them with tin cup in hand.

The banks themselves continue to be on the side of free-trade agreements—and that's their prerogative—but it's worth noting the irony of their being bailed out by these funds. One welcome casualty of the financial crisis should be the easy, blithe statement that free trade is a panacea.

Photo Credit: Diana Walker/Time Life Pictures/Getty Images

Get a daily fix of how politicians, business leaders, and others in the news are faring with the Portfolio.com Capital Index.