The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight today's Supreme Court argument on attorney-client privilege after death, as reported by Jan Crawford Greenberg of the Chicago Tribune; a Newsmaker interview with Jacques, the president of France; a look at the federal government's antitrust move against Intel, the microchip maker, and a Tom Bearden report on making it tougher to declare bankruptcy. It all follows our summary of the news this Monday.% ? NEWS SUMMARY

JIM LEHRER: Whether attorney-client privilege extends beyond death was argued before the U.S. Supreme Court today. The case involves notes Vincent Foster's lawyer took before the White House aide committed suicide. Independent Counsel Kenneth Starr wants them for the Whitewater investigation and a lower court so ordered. Foster's lawyer had this to say today.

JAMES HAMILTON, Vincent Foster's Attorney: Clients need to be able to talk to their lawyers in confidence. Lawyers need that, because they need the information to do their jobs. Clients need to be able to know that what they say is not going to be turned over. It's hard enough for lawyers on occasion to get clients to tell you everything, because clients who come to you may not know you. They may be distrustful. They've obviously got fears, particularly if they come to see you about some criminal matter. So it's hard enough in the normal situation to get a client to talk to you.

JIM LEHRER: Starr's spokesman was also at the court today to comment.

CHARLES BAKALY, Independent Counsel Spokesman: What's important is we are trying to seek every means to get the information for the grand jury. And as was pointed out in the argument, you have a question when the person who may have testimony that's unavailable through that, you try to seek that information from any other means that you can. And that's why we're trying to do that.

JIM LEHRER: We'll have more on this story right after the News Summary. Defense Secretary Cohen today reaffirmed the policy of integrated basic training for men and women, except in the Marine Corps, but he said men and women should live in separate housing. He spoke at a Pentagon news conference.

WILLIAM COHEN, Secretary of Defense: The fact is that women make up an important part of our military today. We could not function without the women in our military today. The question is that being the situation-and we're going to have more women in our military-how can we best train men and women to continue to be the best fighting force in the world? And our key leaders and our NCO leaders believe that the way in which they're doing it today is the best way to achieve that.

JIM LEHRER: President Clinton today launched a media campaign against illicit drugs. He did so at a special meeting of the United Nations on the global drug problem. He said he will ask Congress for $195 million a year for five years and seek more money from businesses and private organizations. He said it was time to end the blame lain between drug supplying and drug consuming countries.

PRESIDENT CLINTON: It does not dismantle a single cartel, help a single addict, prevent a single child from trying and perhaps dying from heroin. Besides, the lines between countries that are supply countries, demand countries, and transit countries are increasingly blurred. Drugs are every nation's problem. And every nation must act to fight them on the streets, around the kitchen table, and around the world.

JIM LEHRER: The Federal Trade Commission voted today to sue Intel for an antitrust violation. They will pursue allegations the microchip company engaged in anti-competitive practices. Intel makes the chips that run 90 percent of the world's personal computers. An FTC official commented.

WILLIAM BAER, Federal Trade Commission: Conduct here, in our view, is conduct that was deliberately designed to injure competitors who had longstanding customer relationships with Intel. There is a bundle of Supreme Court law that basically says a monopolist cannot deliberately set out to injure its rival without an adequate business justification. And we're bringing the case under those bedrock principles of antitrust law.

JIM LEHRER: Intel issued a statement saying the FTC has a mistaken interpretation of the facts and the law. We'll have more on this story later in the program. The space shuttle Discovery undocked from the space station Mir today for the last time. U.S. astronauts and Russian cosmonauts exchanged handshakes and hugs before closing hatches between the two spacecraft. It was NASA's 9th hookup with Mir. Discovery is now returning to Earth carrying astronaut Andrew Thomas, the last of seven Americans to live and work with the Russians. The shuttle is due to land at Cape Canaveral, Florida, on Friday. Actor Charlton Heston was chosen president of the National Rifle Association today. He's been a longtime spokesman for the 2.8 million member organization of gun owners and advocates. He said he would work to improve the NRA's image. The leader of Nigeria died today of a heart attack. General Sani Abacha seized power in the oil rich African nation in 1993. He was 54 years old. It was not immediately clear who would succeed him. Heavily-armed soldiers surrounded his office and residence, allowing only top military officers to enter. Nigeria is the most populous nation in Africa. At the State Department in Washington Spokesman James Rubin had this comment.

JAMES RUBIN, State Department Spokesman: We believe there should be a civilian transition in Nigeria, a transition that allows for a genuine democratic process, including allowing opposition parties to operate, allowing the media to cover the work of opposition parties and allowing the transition that General Abacha promised to take place.

JIM LEHRER: The U.S. and European Union today banned new investments in Serbia and froze its assets in the United States and Europe. They blamed Serbia for atrocities in the southern Serb province of Kosovo. Fighting has intensified there between Serb forces and ethnic Albanians, who want autonomy. Thousands of peoplehave been displaced by skirmishes. In Washington, State Department Spokesman Rubin said the United States had not ruled out military options. John Dalton resigned today as Secretary of the Navy, a post he has held since 1993. President Clinton accepted the resignation with a deep sense of gratitude. Dalton said he was returning to the private sector for personal reasons. He's a Naval Academy graduate and former submarine officer. He was an investment banker and Democratic Party activist in Texas before taking the Pentagon position. And that's it for the News Summary tonight. Now, it's on to an attorney's notes, the president of France, going after Intel, and changing the bankruptcy laws.% ? FOCUS - POSTHUMOUS PRIVILEGE?

JIM LEHRER: Today's Supreme Court arguments over the attorney-client privilege and whether it exists after a client's death. At issue, a 1993 conversation then Deputy White House Counsel Vincent Foster had with a Washington attorney nine days before his suicide. Jan Crawford Greenberg covered today's court session for the Chicago Tribune. And welcome. The basic facts of the case, the lawyer was named James Hamilton. He interviewed Foster about what?

JAN CRAWFORD GREENBURG, Chicago Tribune: About a conversation or any information that Foster may have had concerning firings in the White House Travel Office. Now, this case really kind of came about in 1996, when Kenneth Starr began investigating those firings. Starr was interested in whether anyone in the White House, including the First Lady, might have committed perjury or obstructed justice in earlier investigations of the matter. Now, Vincent Foster would have been an important witness for Starr, because he was one of only a handful of people really who had talked to the First Lady about the matter. And he, you know, could have shed some light on the issue, presumably. That's why Starr is interested in Foster's conversation with his lawyer, Mr. Hamilton. And that's why he wants Mr. Hamilton's notes taken during that conversation just nine days before Vince Foster's death.

JIM LEHRER: Now, the arguments before the court today-first of all, what did-what did Starr's people argue? Who did the arguing for Starr, and what did he say?

JAN CRAWFORD GREENBURG: One of Starr's associates in the Office of Independent Counsel, Brett Cavanaugh, argued on behalf of Mr. Starr. And he urged the justices to essentially create an exception to what's one of the oldest principles in the law. I mean, it goes back to Elizabethan England. And that's the attorney-client privilege, the idea that a person's communications with his lawyer are to be kept confidential even after death. Mr. Cavanaugh argued that any erosion of the privilege in this case really wouldn't undermine the point of the privilege and that it important that prosecutors be able to get to this information, and that a client shouldn't kind of be able to dictate what goes on in grand jury proceedings, you know, from the grave.

JIM LEHRER: And the argument was that there was no other way to get this information?

JAN CRAWFORD GREENBURG: That's right, because the client, Vincent Foster, can't be asked directly about what he knew about the firings in the White House Travel Office.

JIM LEHRER: Now, Mr. Hamilton, did he argue on his own behalf?

JAN CRAWFORD GREENBURG: He did.

JIM LEHRER: What did he say?

JAN CRAWFORD GREENBURG: He argued first. He asked the justices very-in no uncertain terms not to recognize this exception to the attorney-client privilege. He said that it would be detrimental to the lawyer and clientconfidences in any number of cases, and that it's very important for a client to know that whatever he tells his lawyer will remain confidential. So he stressed the broader impact of this case, that it goes far beyond Starr's investigation, and it really would come into play in virtually every case, every time someone consults with a lawyer, no longer could they be assured that those communications, that seeking of legal advice, you know, would remain confidential in the event of their death.

JIM LEHRER: Now, how did the individual justices react to those arguments?

JAN CRAWFORD GREENBURG: It was a very lively argument. And it really reflected, I think, the difficult nature of the case. When Hamilton-Mr. Hamilton first began his argument, I thought it seemed almost obvious that he had five votes against him and that some of the more conservative justices really didn't see a problem with allowing this exception to the attorney-client privilege, but as the case progressed, and as the argument progressed, some of the justices almost seemed to kind of question some of the statements that they had made at the beginning of the argument. Justice Anthony Kennedy, for example, told Mr. Hamilton that he really didn't see a problem with this exception to the privilege and that it didn't really have seemed to have been an issue in earlier exceptions that courts have recognized; it didn't seem to have created a problem, that clients wouldn't feel they could confide in their lawyer, but later during the argument Kennedy kind of stepped back a little, almost as if he had had a change of heart and started reflecting on well, yes, this perhaps could present a problem and this is something, you know, I'm not so sure that we should really enter into here, and some of the other justices seemed a little torn as well. I would say only Justice Antonin Scalia seemed pretty clear that he believed this exception should be recognized and that Starr should get the note and Justice John Paul Stevens was on the other side. I would say he's clearly in Hamilton's camp.

JIM LEHRER: Rest his coin toss at this point-rest of 'em. Now, what is the status of the law in terms has there ever been-has this issue ever been raised and resolved before in any kind of definitive way?

JAN CRAWFORD GREENBURG: Not this specific issue, whether or not the attorney-client privilege can be waived or, you know, pulled apart after the death of a client in the federal criminal proceeding. And the justices seemed almost frustrated by the lack of authority on this very issue. I mean, they wanted-you could tell they wanted to be able to look at some kind of empirical evidence that would show yes, if we allow this exception, then, yes, clients aren't going to consult lawyers.

JIM LEHRER: Yes. Is the attorney-client privilege as generally-is that a matter of law, or is that a matter of custom?

JAN CRAWFORD GREENBURG: It's a judge-created privilege initially, but states also have passed statutes preserving the privilege as well. So I mean it applies in federal courts and state courts. And it's one of the oldest-like I said earlier-one of the oldest principles in our legal system.

JIM LEHRER: I know that the American Bar Association and other legal organizations file briefs on-this is considered a very big deal within the legal profession, is it not?

JAN CRAWFORD GREENBURG: Absolutely. It certainly is, and several groups have weighed in on it, and there were quite a few legal heavyweights in the courtroom today to listen to these arguments. I mean, they just feel it's critical that a lawyer can tell his client when the client comes in the door, the lawyer can say to him, look, what you tell me will never be disclosed unless I give you-I mean, unless you give me permission to disclose it. They say without being able to tell the client that, that the client's never going to really tell them the whole story. But I think one thing about this case is that it's been overstated to some degree. I mean, there are exceptions to the attorney-client privilege, and there always have been. I mean, the privilege has never been absolute. For example, a lawyer can disclose communications he has with a client if he learns the client is going to be committing a crime or fraud. There have been cases where a lawyer could disclose communications with the client when a will is at issue and will contests. And there are exceptions in other states. For example, in California, the privilege pretty much disappears once the estate is closed. So Starr would say, look, we have all these exceptions and the attorney-client privilege still works quite well and these are just extreme arguments that will not come to bear.

JIM LEHRER: And I need the information in order to get to the bottom-

JAN CRAWFORD GREENBURG: It's very important to my criminal investigation.

JIM LEHRER: When can we expect a decision?

JAN CRAWFORD GREENBURG: Probably by the end of June. The court agreed to consider this issue much more quickly than it normally would so. That's why those very unusual arguments today in June-normally they don't hear arguments after April-so because it's kind of on this fast track, we should get an opinion, I would say, within a month.

JIM LEHRER: Okay. Jan, thank you very much.

JAN CRAWFORD GREENBURG: Thank you.% ? NEWSMAKER

JIM LEHRER: Now, a Newsmaker interview with the president of France, Jacques Chirac. Margaret Warner talked with him this morning in New York, where he's attending the United Nations Drug Summit.

MARGARET WARNER, NewsHour Chief Washington Correspondent: Thank you, Mr. President, for being with us. You've got hundreds of thousands of soccer fans coming to France this week for the World Cup championship, and you've got Air France pilots on strike and other transportation workers threatening to strike. How do you think this makes France look to the rest of the world?

JACQUES CHIRAC, French President: First, we have only strike in Air France planes, not in other sectors. I hope we'll find a solution very soon, in the next days. But I can tell you that all our guests will be very, very well welcomed. Among planes, there is many other companies that go to France.

MARGARET WARNER: Do you think strikes like this reflect the resistance that someFrench workers feel to the new demands of the market economy-the coming Euro European currency?

JACQUES CHIRAC: I wouldn't say that. We have a French, social model. And we want to keep it. The point is that we cannot accept to leave people out of the society. Exclusion, we cannot accept that. It's not in the French culture. We can be competitive, but also keep the roots of our social model. That's what we want to do, and that's what we will do.

MARGARET WARNER: Let's turn now to events in South Asia. How dangerous is it for the rest of the world that India and Pakistan now have nuclear weapons?

JACQUES CHIRAC: Well, it's very dangerous, very dangerous for two reasons. First, it's new tensions in that area of the world, with--between India, Pakistan, China and even over. And secondly, because we are going to break the nuclear proliferation treaty and system, and this is very dangerous. That's why we condemned--both the Americans, the French, the Europeans--we condemned those tests of India and Pakistan. And we hope that a solution will come. But this solution should keep the rules of the nonproliferation treaty. This is our position. It's also the American position.

MARGARET WARNER: France, however, and the other European countries did not join the United States and Japan in imposing economic sanctions on India and Pakistan. Why not?

JACQUES CHIRAC: Well, that is not a great difference. The sanctions--they didn't avoid the tests--even if the Pakistan and India knew perfectly that sanctions from America and Japan would come. And we think it's not a good way to avoid proliferation. But this is kind of a detail. But let me tell you that if the sanctions are decided, you will have very big trauma in Pakistan--not in India--but in Pakistan. Many people will suffer with the sanctions--millions and millions of kids, families, older people. And this will drive Pakistan to ask help of the Muslim countries. And what can they give in exchange--well, nuclear technology. And all this is a kind of danger.

MARGARET WARNER: And by saying they would go to Muslim countries, you mean countries, for instance, like Iran?

JACQUES CHIRAC: Muslim, or Muslim world. And this is a danger. And we have to be careful.

MARGARET WARNER: So what can the international community do now to try to contain the damage of India and Pakistan having these weapons?

JACQUES CHIRAC: Well, first they have to be very firm. We all share the same goals, which is no proliferation and respect for the nonproliferation treaty.

MARGARET WARNER: But now, Saturday the U.N. Security Council voted to demand that Pakistan and India stop testing, not export their technology. Both India and Pakistan reacted badly, according to reports I saw. They said it was unhelpful, coercive. I mean, what makes--what reason do you have to think that Indiaand Pakistan are sensitive to, or can be affected by, what you all say?

JACQUES CHIRAC: Well, they reacted badly, I think, for political reasons.

MARGARET WARNER: At home?

JACQUES CHIRAC: Yes. Not for technical reasons. They think that they are humiliated by the other nuclear countries. And they react. It's a problem of face. They do not want to be humiliated. We must understand that. But I think that if we discuss with them, we can--they can sign the CTBT, the treatyof no more tests. And also, they could accept the cut-off system. This would be great progress.

MARGARET WARNER: Do you think we are entering a new era now, however, in which there are going to be several new nuclear states in the world?

JACQUES CHIRAC: Well, that's the reality. But--

MARGARET WARNER: Excuse me, so do you mean you think there will be others in addition to India and Pakistan?

JACQUES CHIRAC: That is a reality. It's possible, I mean. There is a risk. And that's why we cannot change the nonproliferation treaty, because we would open the door to quite a lot of new countries.

MARGARET WARNER: India says that--and Pakistan says it also--that the existing nuclear powers helped both of them become nuclear powers, and that's where the technology comes from. Do you think there's more that the existing powers can do just themselves to make sure they're not transferring technology to other countries, let's say Iran or Iraq or Libya?

JACQUES CHIRAC: It's very difficult to avoid transferring technologies. And if we put India and Pakistan in the corner, we can have a situation in the future where they transfer technologies, because they have technologies, more or less what they had, and they can transfer it to other countries. We're talking about Iran now, but maybe others later.

MARGARET WARNER: This is a major area of difference, is it not, between the United States and France, though, in terms of to what degree countries like the United States and France engage in commerce with Iran or Iraq, other countries that--that are believed to be working on nuclear weapons programs?

JACQUES CHIRAC: We have in the European Union, have a difference of point of view with the Americans about the commercial links between them and some countries. And the United States have unilateral or extraterritorial laws, such as Helms-Burton. It's not fair. And we cannot accept and will never accept that one country, even if it is the United States, could say the rule for everybody, which has not been discussed with.

MARGARET WARNER: I'd like to ask you finally about Kosovo. The Serbs are continuing to shell in the southern part of Kosovo, as you know. What do you think the West should do about this?

JACQUES CHIRAC: May I remind you that when I was elected, we had a dramatic situation in Bosnia. The Yugoslavians were humiliated. And I decided to react very firmly. And I decided the special force--reaction force--which we did. The situation was much better very soon. I have the same will about Kosovo, the same determination. We cannot accept the ethnic cleansing policies. We cannot. And we have to be very firm. We--it's the standing group with United States, Russia, and the Europeans--they are going to meet within two or three days in Paris, and I hope they will stay all together to decide to be very firm to Serbs and to President Milosevic, including, including military action--military action, which of course should be decided by the U.N. Council of Security. And I agree completely with the demand of the British on this subject. And this should be done also in the founding act--NATO-Russia. And this could be done by NATO-I repeat in the frame of the founding act, NATO-Russia, because we have to have Russia inthis, in the standing group. And with the authorization of the U.N. Security Council.

MARGARET WARNER: And would you expect the United States to also participate militarily, if this would be a NATO action?

JACQUES CHIRAC: Of course.

MARGARET WARNER: All right. Well, thank you very much, Mr. President.

JACQUES CHIRAC: Thank you very much.

JIM LEHRER: Still to come on the NewsHour tonight going after Intel and changing the bankruptcy laws.% ? FOCUS - FILING SUIT - INTEL

JIM LEHRER: The Federal Trade Commission's antitrust lawsuit against Intel. Spencer Michels begins our report.

SPENCER MICHELS: The suit against Intel accuses the chipmaker of bullying computer manufacturers by denying those companies essential product data needed to design the new machines. Intel is the world's largest maker of microprocessors, the chips that run computers. Gordon Moore-shown here at Intel headquarters in Santa Clara, California, founded Intel, along with Robert Noyce, in 1968. In 1971, Intel received its first big break when IBM chose to use Intel's microprocessors in its personal computers. Today, Intel's chips-like the Pentium II-powered nearly 90 percent of the world's personal computers. Over the past five years, Intel's sales have risen 34 percent annually to $25 billion last year. But Intel's dominance has provoked several recent legal challenges. In a civil suit filed last November, Intergraph Corporation of Huntsville, Alabama, makers of high-end computer work stations accused Intel of withholding information about its Pentium II processor after a dispute over patent rights. Last month Intergraph won a preliminary injunction requiring Intel to continue supplying it with access to advanced product information. Intel was also sued by Digital Equipment Corporation in May of 1997. It accused Intel of infringing on Digital patents in the design of some of its Pentium chips. Intel then reportedly threatened to stop supplying its chips to Digital. A settlement was reached in this case last year, which included the sale of Digital's semiconductor manufacturing plant. This year, Intel has also faced other challenges. A drop in demand for personal computers, the Asian economic crisis--which decreased overseas sales, and increased competition from other chip manufacturers like Advanced Micro Devices and Cyrix, which has lowered the price of chips. Intel's stock has been hovering well below its 1998 high of $94 and fell even further today. The suit against Intel is the government's second recent antitrust suit filed against a computer industry giant, following actions against Microsoft last month.

JIM LEHRER: Phil Ponce has more.

PHIL PONCE: Late this afternoon Intel put out a statement saying the FTC's decision was a "mistaken interpretation of the law and the facts." Joining us first to lay out the case against Intel is William Baer, Director of the Bureau of Competition at the Federal Trade Commission. Mr. Baer, welcome.

WILLIAM BAER, Federal Trade Commission: Thank you, Phil.

PHIL PONCE: What exactly was Intel doing wrong?

WILLIAM BAER: Intel today-if I could show you a little prop here-is the dominant-the monopolist supplier of the micro processor used in computers throughout the world. This is a Pentium II chip, one of their high end chips. They have almost-

PHIL PONCE: But the whole thing is not the chip, jus the-

WILLIAM BAER: This is the motherboard in which-

PHIL PONCE: In which the chip sits. Because Intel is a monopolist it has power over its customers that no other competitor has. What it has done on three different occasions is gone to customers, who are developing different ideas, ideas that potentially would compete with Intel and said, if you want to continue to get the information you need to use our product, if you potentially want to continue to get our product at all, you've got to surrender up those ideas, license them to us. They've gone outside the judicial system, using their monopoly power as a club to get an advantage in the marketplace. That discourages these firms and other firms from potentially innovating with-against Intel if they know eventually their invention is going to have to be surrendered up to the dominant firm.

PHIL PONCE: So the harm that was being done then to these-to these three companies was what?

WILLIAM BAER: The harm is-first of all, the harm done to companies is to punish them as customers for trying to compete. The harm done to the marketplace is a signal it sends that if you try to compete with Intel, you'll be punished. That means less innovation, less competition. It's competition which has gotten Intel to where it is today. Less competition means fewer good ideas, less pricing competition, and generally a bad situation for consumers on a going-forward basis.

PHIL PONCE: Late this afternoon Intel issued a statement saying that the FTC cannot show any harm to competition in any market, so your response to that is-

WILLIAM BAER: Our response is first Intel says they really didn't even try to harm these three firms. All they did was put a speed bump in their way. But the high-tech industry is a very fast race track and if there's one firm that can go out there and strategically lay speed bumps in the path of anybody trying to compete, they're going to harm those companies, but also they're going to harm competition on a going-forward basis. People need to know that if they're going to invest in the R&D needed to compete with a company like Intel, but they potentially can reap rewards of that investment.

PHIL PONCE: The research and development.

WILLIAM BAER: That's right. If they know at the end of the day that they're going to have to license up that technology to Intel, they may not even start the race. And that means Intel, which got to its current position, because it had a better product, will be able to stay there, not because it has a better product, but because it was unfairly able to exclude potential rivals.

PHIL PONCE: Isn't it common practice and is it not acceptable for companies to exchange information? As part of the flow of business, you give me this information, I'll give you that, you don't give me that information, I won't give you this?

WILLIAM BAER: Cross-licensing happens all the time. And patent disputes happen all the time. But there's a judicial forum, a judicial process where patent disputes can and should be resolved. What Intel has is a weapon nobody else has. It has the weapon of monopoly power. And it can say to somebody who dares to compete, dares to assert its intellectual property rights, I'm going to disadvantage you in the marketplace as a customer, you won't get the technical information you need to make my chip work properly, you may not even get that chip at all. And, furthermore, I'm going to go tell all your customers that you're somebody who can't be counted on as a reliable computer maker, because you may not be in a favored situation with Intel anymore. That's abuse of their monopoly position.

PHIL PONCE: So you're not saying that having a monopoly position is in itself illegal, in this case Intel controls 80 or 90 percent of the market. It's how that company uses its dominant position. Is that what you're saying?

WILLIAM BAER: That's right, Phil. The law is clear that someone who gets to a large market share, because they have a better product, or there are more vigorous competitors, is a monopolist, but a monopolist the right way. What we're saying is now that Intel is there it's begun to take conduct that doesn't relate to competing fairly on the merits, but it's injuring its rivals in a way that will cement its dominant position and prevent it from having to face the sort of competition it had to fight to get to the position it's in today.

PHIL PONCE: So what is it you want Intel to do, the FTC?

WILLIAM BAER: What the commission's order would do is basically prevent Intel from using its monopoly club in order to get intellectual property from competitors.

PHIL PONCE: By intellectual property, you mean ideas that companies have generated to do business with?

WILLIAM BAER: Patents. That's right. DEC is a good example. DEC has a chip called the alpha chip, which is a terrific product, probably better than just about anything Intel has on the market today. And what Intel did was said you can't get the information you need to make the Pentium work, Intel's product work, unless you surrender up the intellectual property rights, the patent rights, on the alpha chip.

PHIL PONCE: Mr. Baer, how was this tied in with the Microsoft lawsuit? Is there a connection?

WILLIAM BAER: There's a connection only in the sense that these are both two firms thathave become dominant in various segments of the computer industry and in both cases the government has alleged they've abused that dominant position.

PHIL PONCE: And there are reports that the investigation could ultimately be broader, you could bring additional charges. Is there anything you can tell us about that?

WILLIAM BAER: I'm afraid I can't to the extent that there's anything else going on. At the commission these days, it's non-public and the commission acts when the five-member commission votes as it did today to bring a complaint.

PHIL PONCE: And very last question. Some people worry that if Intel implements the kinds of things that you want, the company could conceivably be hurt, and the country could lose an innovative, influential company. How do you respond to that?

WILLIAM BAER: That's the farthest thing from anybody's mind over at the FTC. All we're saying is that there's a narrow range of conduct that potentially unfairly cements you as a monopolist. You're still free to compete vigorously in the marketplace, but you can't abuse your position to prevent other people from having a fair chance to compete with you.

PHIL PONCE: Mr. Baer, thank you for being with us.

WILLIAM BAER: Thank you.

PHIL PONCE: We invited Intel to join us, but the company declined.

PHIL PONCE: With us now is Daniel Wall, an antitrust lawyer with the San Francisco-based firm of McCutcheon, Doyle, Brown, & Enerson. He's represented Intel before the FTC in the past.Welcome, Mr. Wall. Mr. Wall, does the government have a case?

DANIEL WALL, Antitrust Attorney: Well, I think the government is right to be concerned about the state of competition in the computer industry, because it is a very important industry and a main driver of the country's economy. But I think that in this instance that the government is on a very tenuous ground. This case is really not about the type of competition that one thinks the antitrust laws govern. That's competition in the market place. It's about a very different type of competition, the competition to prevail in a lawsuit. All of the conduct at issue occurred exclusively in the context of some sort of a patent dispute. There is no challenge being made to Intel's ordinary competitive strategies, its pricing, its dealings with customers and distributors, and I find that to be somewhat odd.

PHIL PONCE: So, Mr. Wall, are you saying that what Intel is being accused of is not something that was part of their normal flow of business, that these issues came up in the course of litigation?

DANIEL WALL: Well, that's right. Now, consider the general claim, which is that Intel has this great club over companies that are making computers out of its chips. Intel could conceivably use that club in a variety of ways, for example by refusing to offer information or products to customers that buy microprocessors from AMD or Cyrix, but it doesn't do that. Instead, it is being accused solely of having brought in the high hard heat when it was involved in some very high stakes patent litigation.

PHIL PONCE: Do you agree with the-with Mr. Baer that Intel does have a significant club by virtue of its 90 percent market share?

DANIEL WALL: Intel's microprocessors are the world's standard, and if you build a business around those microprocessors, obviously, you're giving Intel a very strong club. But, again, that doesn't necessarily mean that antitrust issues are being presented. One of the most fundamental principles in antitrust law is that they exist to protect consumers, not competitors. And I think one of the FTC's great challenges in this case will be to demonstrate how it is that this practice, which has occurred in these litigation scenarios, harms the consumer.

PHIL PONCE: Are you saying that harm to consumers is not readily obvious to you at least?

DANIEL WALL: Well, it's not readily obvious to me, and when I read the FTC's complaint today, what I saw is that they simply allege that the natural and probable effects of Intel's conduct is to diminish incentives in the industry to develop new and improved microprocessor technology. That's what they're going to prove. It seems like a stretch.

PHIL PONCE: Mr. Wall, if the government were to prevail, what do you think the impact might be on Intel?

DANIEL WALL: Well, again, this is not about Intel's core competitive strategies. I think you can draw a contrast to the Microsoft case, which what everyone thinks about it is clearly about Microsoft's market strategies. This is about a litigation strategy that arises only when it-when Intel finds itself in patent litigation, so I doubt it would have that kind of effect on Intel's business.

PHIL PONCE: Having raised the subject of Microsoft, do you see a connection between the two?

DANIEL WALL: Not really. I think that there is a visceral connection, because the government is going after two very high profile companies, but, like I said, the Microsoft case is very different. It is about competitive strategies in the market place, and whether you think that it's a good idea or a bit aggressive, you can at least recognize that it is the traditional stuff of antitrust. This is quite odd, because it, again, is about litigation tactics.

PHIL PONCE: But do you perceive a concern on the part of the government that perhaps too much power is being concentrated in the computer industry in too few companies/

DANIEL WALL: Oh, I think that comes through loud and clear in the government's complaint, and the FTC's administrative complaint, they are talking about the power of Intel and its market share, and so forth. But as Bill Baer acknowledged, that alone is not unlawful. That just gives you one of the elements of a monopolization case. The one at issue here is the monopoly conduct, whether this is the type of conduct that hurts consumers by substantially reducing the amount of competition that one sees in the market place.

PHIL PONCE: Mr. Wall, how is Intel perceived in the industry as far as their innovation, their aggressiveness, their creativity?

DANIEL WALL: Well, I don't think there are any companies in the economy that are perceived to be more innovative and dynamic than Intel. The company runs itself very, very hard, and it's constantly improving its products and innovating. And, indeed, many of these patents that become at issue in these cases are the fruits of that innovative effort.

PHIL PONCE: Mr. Wall, as someone who advises companies in matters like this, what is Intel's strategy apt to be at this point to fight this?

DANIEL WALL: Well, the FTC proceedings that have been started involve a fairly long administrative process. One of the things that Intel will have to do is take a lot of third party discovery of some of the companies that are involved in this. It will also have to marshal the side of the case that you won't see in any government complaint, the side that it will try to use to show that its dominant market strategies are not the type that the government alleges but involve trying to deliver the best products at the best prices.

PHIL PONCE: Mr. Wall, thank you for joining us.% ? FINALLY - BANKRUPTCY LAW?

JIM LEHRER: Finally tonight, Congress considers making it harder to declare bankruptcy. Tom Bearden reports.

TOM BEARDEN: Shirley Nichols is moving to a house where she'll have six roommates to help pay the rent. It's not the kind of living situation that most 40 year olds who make a pretty good living would find themselves in. But Nichols can't afford to have a place by herself, because she was forced into bankruptcy last October.

SHIRLEY NICHOLS: I had worked entirely too hard and became ill, and then once I was ill, my doctor essentially told me to quit my job or consider dying. And those were pretty tough options. So I quit my job.

TOM BEARDEN: Nichols was out of work for 14 months. During that time she had no health insurance and many of her medical bills were charged to high interest credit cards. She found a less stressful job in public relations, but it pays a lot less. She tried to keep up, but interest on the $30,000 worth of debt she built up kept compounding. Finally-

SHIRLEY NICHOLS: I spoke with an attorney, and he gave me my options, and I agonized over that for a month. And I went back to him, and I said, I don't really feel that I have another alternative, so I filed for bankruptcy. And here I am.

TOM BEARDEN: Shirley Nichols is far from alone. Last year a record 1.3 million Americans filed for personal bankruptcy. That's a more than 350 percent increase since 1980, when just under 200,000 bankruptcies were reported. In a complete reversal of past trends bankruptcies are rising, in spite of an extremely healthy economy. Why this is happening has become a matter of considerable debate. Iowa Senator Chuck Grassley.

SEN. CHARLES GRASSLEY, (R) Iowa: There is no shame anymore with bankruptcy. Some people use bankruptcy for financial planning, and that's wrong.

TOM BEARDEN: But others, like Bankruptcy Attorney Bob Weed, who represented Nichols, paint a far different picture.

BOB WEED, Bankruptcy Lawyer: The credit card companies say that the stigma is gone from bankruptcy. What's gone on is they've spent the last 20 years getting rid of the stigma against debt, and if debt continues to rise explosively, bankruptcies have to follow, because people get into a situation where they can't pay.

TOM BEARDEN: Under current law people have a choice as to how they file for bankruptcy. Under one section, called Chapter 13, they get to keep most of their assets, but must agree to a repayment plan for any remaining debt. Under Chapter 7, most assets are converted to cash, and the money is used to pay off secured debt, like mortgage and car loans. Unsecured debt, like credit cards, is simply erased. About 70 percent of those who file for bankruptcy, like Shirley Nichols, use Chapter 7. That brings them to hearings like this one in Alexandria, Virginia. A federal trustee reviews the case and if he or she determines that nobody is trying to hide assets and if no creditors object, the debtor gets a fresh start. But at congressional hearings, lobbyists representing retailers, banks, and creditors say all this is far too easy. Mallory Duncan, with The National Retail Federation, says that hundreds of thousands of people, who can afford to pay at least some of their debt, are walking away scot-free.

MALLORY DUNCAN, The National Retail Federation: There are a lot of high-profile bankruptcies. You see people like Kim Basinger or Burt Reynolds or Tony Braxton filling for bankruptcy. Was it-a year ago People Magazine had a cover story called "Going Broke on $33 Million a Year," and basically featuring a number of celebrities who decided to wipe out their debts, who were having problems with debts. And people who might have been on the edge, who might have thought, well, can I make it or not make it, when they see someone like that and they continue to be celebrated afterwards, they say, well, maybe this is the approach to take.

TOM BEARDEN: So credit card companies have gone to Congress for relief. Two bills have been introduced that would make it harder for people to discharge their debt under Chapter 7. Michael McGary, Director of Public Affairs for Visa USA, is lobbying for bankruptcy reform.

MICHAEL McGARY, Visa USA: One of the things that we have found in research that we've conducted, surveys of people who have filed for bankruptcy over the years, is recently they're saying that they've learned of bankruptcy as an option from family and friends. Close to 50 percent of people surveyed, who had filed for bankruptcy, said that they learned of it as an option from family and friends, and that's really a sea change in the social attitude towards bankruptcy. And unfortunately, some people are viewing bankruptcy as a first option, rather than a last resort.

TOM BEARDEN: But Attorney Weed argues that last year the credit card company sent out over 881 million solicitations by mail trying to give people more credit.

BOB WEED: If they wanted to, you know, if they sent somebody a credit card, they could say, how much are you making and how much do you already owe and weed out a lot of the people who are hopelessly in debt. But they choose not to do that, because the lending is so profitable they don't want to do anything that interferes with them getting more and more and more.

TOM BEARDEN: Elizabeth Warren teaches bankruptcy law at Harvard. She says there are some abusers but says they are in the minority. Warren says credit card companies are now effectively trying to get the government to collect their bad debts.

ELIZABETH WARREN, Harvard University: If a rise in abuse explained the rises in consumer bankruptcy filings, then we would expect to see increased use by higher-income people, in other words people who weren't in so much serious trouble were starting to use the bankruptcy system. That's not what the data over time shows.

TOM BEARDEN: 1997 Census data shows the income of the average debtor declaring Chapter 7 has declined by more than half since 1980, going from an average of $42,000 to $17,000. But Visa's McGary says an industry-funded study found that many debtors could well afford to pay at least some of their debts.

MICHAEL McGARY: Ernst & Young looked at a nationally representative database of people who filed for bankruptcy. What they found was that in 1997, about 15 percent of people who filed for bankruptcy, or 150,000 people, had an ability to repay a significant portion of their debts.

TOM BEARDEN: Both the House and the Senate bills are similar in that they would set up a new standard that would exclude some people from filing for Chapter 7 bankruptcy and erasing their debts. The bills would force some people into Chapter 13, which would put them, instead, on a repayment plan. The Senate bill would give bankruptcy courts a greater role in deciding which chapter should apply to a debtor. One of the guidelines would be whether the consumer has the ability to pay at least 20 percent of all unsecured debt. The House bill is more stringent. Anyone earning more than 75 percent of the median national income would be subject to a new test. They would have to file under Chapter 13 if they have at least $50 a month left over after living expenses are deducted and if they can repay 20 percent of their debt within the next five years. Congressman George Gekas is the sponsor of that bill.

REP. GEORGE GEKAS, (R) Pennsylvania: When and if an individual or an entity reaches a point where the financial obligations, indeed, are burdensome but in a fulsome analysis of that particular situation it is found that there is some ability to repay some of the debt, then we provide a mechanism to accommodate that salient principle as well.

TOM BEARDEN: Attorney Weed strongly opposes the Gekas bill. He says it would devastate the middle class.

BOB WEED: The underlying idea of a mandatory repayment plan puts people in a hopeless situation, because they take every spare dollar. You can't save anything. And nobody gets through five years without something bad happening. You miss a payment to the court, you're thrown out and you've got to start your five years all over again.

TOM BEARDEN: Weed points to Shirley Nichols as an example. When she filed for bankruptcy, she was bringing home close to $45,000 a year. Under the Gekas bill, she would have been forced into Chapter 13, because her income was more than 75 percent of the median. Nichols says being put on a repayment plan would have changed her life drastically.

SHIRLEY NICHOLS: I would probably never be able to retire. I would probably have to work the rest of my life. And I'll tell you why I say that. I'm 40. By the time I got off the five-year program I'd be in my mid 40's. I'd have to start repairing my credit at that point. I'd have to start saving for retirement.

TOM BEARDEN: Some of the people we've talked to claim that incomes as low as perhaps $45,000 would be affected by these changes.

REP. GEORGE GEKAS: We know that under our bill the ones with the higher incomes will have a more difficult time escaping the plan that we have for them for repayment, because automatically they reach more than 75 percent of the median income, therefore, their circumstances are under scrutiny to determine whether their monthly income will have any overage with which they can start to repay.

BOB WEED: They're arguing that people who can afford to pay should pay but their definition of somebody who can afford is somebody who can pay 66 bucks against a monthly bill of $350. That's not afford to pay; that's hopeless. And if you take away the last $60 that somebody has after they've bought shoes for the kids and rent and food and gas in the car, then the car breaks down, there's nothing they can do.

TOM BEARDEN: The Gekas bill has also been criticized for putting child support payments on the same level as credit card debt. Child support obligations can't be erased by any form of bankruptcy. But the fear is that aggressive collection by credit card companies will tend to force parents to pay those debts first, rather than make support payments. Hillary Clinton weighed in on the issue in her syndicated column, saying she was for bankruptcy reform but "I do quarrel with aspects of the bill that would force single parents to compete for their child support payment with big banks trying to collect credit card debt." Rep. Gekas defends his bill, saying it doesn't change the status of child support under current law.

REP. GEORGE GEKAS: We have been for a long time-even prior to the latest blasts of criticism-trying to work out a system where we even increased the priority status of support.

TOM BEARDEN: If Congress passes bankruptcy reform legislation, one thing is sure: Debtors like Shirley Nichols won't be able to erase their debts as readily as they can under current laws.% ? RECAP

JIM LEHRER: Again, the major stories of this Monday, the U.S. Supreme Court heard arguments on whether attorney-client privilege extends beyond debt, and the Federal Trade Commission voted to sue Intel for antitrust violations. A follow-up before we go: We had a conversation Friday night with Julie Taymor, Director of "The Lion King" on Broadway. She won a Tony Award last night for Best Director of a Musical and "Lion King" won for the year's best musical. We'll see you on-line and again here tomorrow evening with an interview with the president of South Korea, Kim Dae Jung, among other things. I'm Jim Lehrer. Thank you and good night.