Second, in 1978, for the
first time since 1938, Congress passed major new legislation reforming the
bankruptcy process. The new law was the result of seven years of debate by
lawyers and law makers, but with little or no input from economists. This
is not surprising, since economists have expended little effort on analyzing the
effects of bankruptcy procedures or bankruptcy law provisions. Rather, most
analysts have tended to assume the existence of whatever legal or institutional
arrangements are necessary to facilitate efficient economic outcomes. Fama