> I know we instinctively want to frame this as a privacy problem

I think it is, but I think this is a more fundamental level of privacy than most people are thinking of when they think of privacy

  > In "good" times this made investigations run smoothly.

Privacy people often talk about a concept called "Turnkey Tyranny". Really a reference to Jefferson's "elective despotism". The concept is that because any democracy can vote themselves into an autocracy (elective despotism) that the danger is the creation of that power in the first place. That you don't give Mr Rogers (or some other benevolent leader) any power that you wouldn't give to Hitler (or any horrifying leader).

Or as Jefferson put it

  The time to guard against corruption and tyranny, is before they shall have gotten hold of us. It is better to keep the wolf out of the fold, than to trust to drawing his teeth and talons after he shall have entered.

  > but the real problem we need congress to act

So no, that is not the "real problem". They should be involved but there are more fundamental issues at hand. Power creeps. Power creeps with good intention[0]. But there is a strong bias for power to increase and not decrease. And just like power creep in a movie or videogame it doesn't go away and can ruin everything.

Jefferson himself writes a lot about this tbh. It is why we have a system of checks and balances. Where the government treats itself adversarially. But this is also frustrating and makes things slow. So... power creeps.

So the real problem we need to solve is educating the populous. They need to understand these complexities and nuances. If they do not, they will unknowingly trade their freedom to quench their fears.

And this is why it is a privacy problem. Because we the people should always treat our government adversarially. Even in the "good times". Especially in the "good times". The founders of the US constitution wrote extensively about this, much like the privacy advocates write today. I think they would be more likely to take the position of "why collect this information in the first place?" than "under what conditions should this information be collected?". Both are important questions, but the latter should only come after the former. Both are about privacy. Privacy of what is created vs privacy of what is accessed.

[0] You mentioned banking, so a recent example might be the changes in when transactions of a certain level trigger a bank report. The number has changed over time, usually decreasing. It's with good intention, to catch people skirting the laws. You'll never get 100% of people so if this is the excuse it an be a race to reporting all transactions. Maybe you're fine with Mr Rogers having that data, but Hitler? You have to balance these things and it isn't so easy as the environment moves. You solve a major part of the problem with the first move but then the Overton window changes as you've now become accustomed to a different rate of that kind of fraud (and/or as adversaries have adapted to it). A cat and mouse game always presents a slippery slope and unless you consider these implicit conditions it'll be a race to the bottom.