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Holder set for lawmakers' heat on gun-walking

WASHINGTON - Attorney General Eric Holder says it was inexcusable for the Bureau of Alcohol, Tobacco, Firearms and Explosives to use a controversial law enforcement tactic known as "gun-walking" in an effort to identify and prosecute major arms trafficking networks along the Southwest border.

In prepared testimony for what is expected to be a rancorous hearing Thursday before the House Judiciary Committee, Holder says the Justice Department has been fully cooperative with Congress on the question of how ATF managed to lose track of hundreds of illicitly acquired weapons in Arizona that the agency was supposed to be following. Many of the guns were eventually recovered from crime scenes in Mexico and the U.S.

In Operation Fast and Furious, two of the guns purchased at a Phoenix gun store were recovered from the scene of a shooting that killed border agent Brian Terry on the U.S. side of the border.

On Wednesday, the ranking Republican on the Senate Judiciary Committee, Chuck Grassley, whose inquiry brought the tactic used in Operation Fast and Furious to light, called for the resignation of one of Holder's top aides, criminal division chief Lanny Breuer.

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Breuer has said he made a mistake in not telling Holder and Deputy Attorney General James Cole that the controversial gun-walking tactic — letting guns "walk" across the border in an effort to identify higher-ups in gun networks — had been used in an earlier ATF probe called Operation Wide Receiver, which Breuer had known about since April 2010.

Grassley said that in addition to not informing his superiors, Breuer gave misleading answers when the senator asked Breuer whether he had reviewed a Justice Department letter to Congress last February that said ATF makes every effort to intercept weapons that have been purchased illegally — an assertion that was incorrect in both Operation Wide Receiver and Operation Fast and Furious.

Breuer told Congress he cannot say for sure whether he saw a draft of the inaccurate letter and that he has no recollection of having done so. At the time the letter was drafted, Breuer told one of the letter's main drafters, "As usual, great work."

Breuer "needs to go immediately," Grassley said.

In response, Justice Department spokeswoman Tracy Schmaler said Breuer has acknowledged his mistake to Congress and to the attorney general and said Holder "continues to have confidence in assistant attorney general's Breuer ability to lead the criminal division."

Schmaler said Breuer's division has led important prosecutions against high-ranking gang members, secured the extradition of dangerous fugitives and spearheaded efforts with Mexico to enhance that country's law enforcement capacity.

There are also questions about whether the ATF tried to use the gun-walking policy to push controversial new rules about gun sales.

Documents obtained by CBS News show that officials discussed using dealers' sales, including those encouraged by the ATF to justify a new gun regulation called "Demand Letter 3." That would require some U.S. gun shops to report the sale of multiple rifles or "long guns." Demand Letter 3 was so named because it would be the third ATF program demanding gun dealers report tracing information.

"There's plenty of evidence showing that this administration planned to use the tragedies of Fast and Furious as rationale to further their goals of a long gun reporting requirement. But, we've learned from our investigation that reporting multiple long gun sales would do nothing to stop the flow of firearms to known straw purchasers because many Federal Firearms Dealers are already voluntarily reporting suspicious transactions. It's pretty clear that the problem isn't lack of burdensome reporting requirements," Grassley said.

Grassley and Rep. Darrell Issa, R-Calif., wrote Holder a letter in July asking if officials in his agency discussed how "Fast and Furious could be used to justify additional regulatory authorities." So far, they have not received a response.

Justice Department officials also wouldn't comment to CBS News on whether gun-walking was used to support tighter regulations.

CBS News investigative correspondent Sharyl Attkisson contributed to this report.