The watch list operation came under fire last year from the Justice Department's Inspector General for inaccuracies, and Mueller said it would take years to fix because verifying 200,000 names on a dozen lists is time consuming.
Mueller defended his counterterrorism and civil liberties record, and renewed his campaign against a separate domestic intelligence agency before a Senate committee yesterday that questioned him about turnover in his intelligence division, government prosecution of reporters and National Security Agency wiretaps.
Mueller reported "significant progress" in developing a domestic intelligence division at the FBI but acknowledged that "some harbor doubts about the FBI's ability to transform itself into a leading intelligence agency."
Later, former senior CIA analyst John Gannon recommended that Congress beef up the Homeland Security Department's intelligence wing and put it in charge of domestic intelligence.
"Approaching five years after 9/11, we still do not have a domestic intelligence service that can collect effectively against the terrorist threat to the homeland," he said.
Democratic Sen. Dianne Feinstein of California said she was concerned about turnover at the FBI, noting that there have been six counterterrorism managers in the past five years. The current head, Gary M. Bald, recently announced that he is stepping down after eight months at the new National Security Branch.
Mueller said the FBI has been losing its managers to higher-paying jobs in industry. But Feinstein said Mueller should obtain commitments from his top managers to remain on the job for a couple of years.
Mueller's testimony also served as an opportunity for senators to voice frustration with the Bush administration's assertions of executive authority.
Sen. Arlen Specter, a Pennsylvania Republican who chairs the Judiciary Committee, complained that "the attorney general won't tell us anything" about the NSA wiretapping program.
Specter said it is time for Congress to assess whether "modification or clarification of those statutes" governing the prosecution of reporters in leak cases is needed. He added that the media do more government oversight than his committee.