The goal should be to ensure not that they never fail, but that for Fannie and Freddie and for other institutions, failure reacquires its proper status in a capitalist society: that of a tolerable event.
Insulating these financial behemoths from failure encourages intolerably high risk taking behavior. On the other hand, refusing to bail them out can send shock waves through the economy. What's worse? Hard to say, but I'd guess the bailout is worse--at least in the long run-- because, as noted in the article, with every bailout the problem gets worse.
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US Treasury Secretary Henry Paulson announced this morning that planning was underway to rescue Bennigans and Stake & Ale resturant chains as part of the federal government's efforts to shore up the faltering casual dining industry. Calling a $45 dinner for a family of four an essential part of the American Dream, Paulson said "Greater oversight of food service enterprises and the new temporary authorities I am requesting are urgently needed, and they'll contribute to confidence and stability in the food and beverage markets." :)
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