The ATF was heavily criticised for its handling of the investigation into David Koresh prior to the siege, and for the botched raid on 28 February 1993 that led to the deaths of four ATF agents and five members of the Branch Davidians. Although the FBI took command of the incident immediately after the first raid, and were responsible for the final assault on 19 April, there was a widespread perception that ATF was to blame for allowing the situation to develop in the first place.

Less than two weeks after the end of the siege, Treasury Secretary Lloyd Bentsen was publicly hinting that ATF Director Stephen Higgins would be removed from his post or forced to retire (the ATF was part of the Department of the Treasury from 1972-2003), and ordered Assistant Secretary Ronald Noble to conduct an investigation into the ATF's handling of Waco. The Department of Justice also conducted a separate, broader investigation into federal law enforcement's conduct at Waco.

In late September 1993, shortly before the Treasury report was published, Higgins announced his resignation. Noble's report concluded that the raid was poorly-conceived and premature, ATF's intelligence was flawed, and that there were "serious, systemic defects in ATF's ability to plan for and to conduct a large scale, tactical operation in the context of the difficult circumstances confronted near Waco."

The report was not particularly critical of Higgins personally, but strongly criticised several other ATF officials — most notably the Special Agent in Charge and Assistant Special Agent in Charge of the ATF's Houston field office, Phillip Chojnacki and Charles Sarabyn. Chojnacki and Sarabyn were accused of having bungled the planning of the raid, exercising poor judgement in proceeding even after Special Agent Robert Rodriguez (who had been undercover inside the compound) warned them that the Davidians knew a raid was imminent, and misleading their superiors and the public after the raid failed.

Following the report's publication, Chojnacki and Sarabyn were suspended, then demoted and reassigned. Several other ATF officials were also suspended: David Troy, chief of the intelligence division; Daniel Hartnett, deputy director for enforcement; and Edward Conroy, deputy associate director for enforcement. Director of the US Secret Service John Magaw was appointed to succeed Higgins.

The ATF's existence as an independent agency was under threat in 1993, but it wasn't really because of Waco: in mid-1993, Vice President Al Gore proposed merging both ATF and the Drug Enforcement Administration into the FBI, as part of a federal government efficiency drive. That effort was eventually derailed by objections from the Treasury Department, resistance from Congress, and (if you can believe it) public opposition from both the NRA and pro-gun control lobby groups.

Edit: typos