The New York Times, always on the leading edge of reporting in this area, is reporting that US military intelligence is expanding its role in domestic intelligence gathering. It, and the CIA, have been using non-compulsory letters to get access to financial information on residents of the United States. Perhaps more troubling from a privacy point of view is that most recipients of these letters volunteer the info. Check it out: Military Is Expanding Its Intelligence Role in U.S. - New York Times.
In related news, changes to an American army manual have raised concerns that the Army also takes the position that warrants are not required for domestic wiretapping. See: Deletions in Army Manual Raise Wiretapping Concerns - New York Times.
Update (20070114): On Fox News Sunday, VP Dick Cheney says the practice isn't illegal:
Cheney: Credit checks aren't illegal - Yahoo! News
"The Defense Department gets involved because we've got hundreds of bases inside the United States that are potential terrorist targets," Cheney said.
"The Department of Defense has legitimate authority in this area. This is an authority that goes back three or four decades. It was reaffirmed in the Patriot Act," he said. "It's perfectly legitimate activity. There's nothing wrong with it or illegal. It doesn't violate people's civil rights."
The Pentagon and the CIA, to a lesser extent, have used this little-known power, officials said. The FBI, the lead agency on domestic counterterrorism and espionage, has issued thousands of such letters since the attacks of Sept. 11, 2001.