This story's a little frightening, if it's true. A student requested a copy of Chairman Mao's Little Red Book through interlibrary loan. As a result, he was visited at his parent's home by federal agents with the Department of Homeland Security. The book is apparently on a DHS watch list, and the student's request, combined with the significant time he has spent abroad, caused them to take action.
What's worse, it appears that DHS intercepted the book he requested, waved it at him when they showed up at his house to threaten him, but then didn't give it to him when he left. So he wasn't just harrassed, he was also denied his book.
I'm not sure how this sort of thing would work with UC Berkeley's library. Our system only maintains a list of books you currently have checked out; once you return it, the book is forever deleted from the record. Probably the FBI or whomever could find the relevant harddrive and attempt to find something, but with all the records being created and destroyed on a daily basis, it's unlikely they could piece together much of a history on a given patron. The best they could do is find out what a student has now, and what they've checked out and never returned (for some reason, the system keeps track of fines paid forever, as well as the books they were paid on). Further, employees are instructed not to give access to any data to a federal agent unless they have a specific warrant. At the same time, what of Interlibrary Loan requests, or requests to NRLF, our off-site storage facility? These are often submitted by e-mail. Can Homeland Security intercept and review these requests?
Of course, having said all that, I'm somewhat suspicious of this story. It looks like the only source are the two professors who, based on comments at the end, seem to be getting a bit histrionic about things (contemplating cancelling a class on terrorism because it may subject all their students to surveillance, a general concern that they've been spied upon, etc.). The student himself hasn't come forward. So the only evidence for this story appears to be the testimony of two professors with possible political agendas. I'm not saying the story isn't true, but I'd treat it skeptically until some other evidence confirms it.