ABC News reports: In his last official act of business in 2011, President Barack Obama signed the National Defense Authorization Act from his vacation rental in Kailua, Hawaii. In a statement, the president said he did so with reservations about key provisions in the law — including a controversial component that would allow the military to indefinitely detain terror suspects, including American citizens arrested in the United States, without charge.

The legislation has drawn severe criticism from civil liberties groups, many Democrats, along with Republican presidential candidate Ron Paul, who called it “a slip into tyranny.” Recently two retired four-star Marine generals called on the president to veto the bill in a New York Times op-ed, deeming it “misguided and unnecessary.”

“Due process would be a thing of the past,” wrote Gens Charles C. Krulak and Joseph P. Hoar. “Current law empowers the military to detain people caught on the battlefield, but this provision would expand the battlefield to include the United States – and hand Osama bin Laden an unearned victory long after his well-earned demise.”

The president defended his action, writing that he signed the act, “chiefly because it authorizes funding for the defense of the United States and its interests abroad, crucial services for service members and their families, and vital national security programs that must be renewed.”

Senior administration officials, who asked not to be named, told ABC News, “The president strongly believes that to detain American citizens in military custody infinitely without trial, would be a break with our traditions and values as a nation, and wants to make sure that any type of authorization coming from congress, complies with our Constitution, our rules of war and any applicable laws.”

The Associated Press adds: The administration also raised concerns about an amendment in the bill that goes after foreign financial institutions that do business with Iran’s central bank, barring them from opening or maintaining correspondent operations in the United States. It would apply to foreign central banks only for transactions that involve the sale or purchase of petroleum or petroleum products.

Officials worry that the penalties could lead to higher oil prices, damaging the U.S. economic recovery and hurting allies in Europe and Asia that purchase petroleum from Iran.

The penalties do not go into effect for six months. The president can waive them for national security reasons or if the country with jurisdiction over the foreign financial institution has significantly reduced its purchases of Iran oil.

The State Department has said the U.S. was looking at how to put them in place in a way that maximized the pressure on Iran, but meant minimal disruption to the U.S. and its allies.

In response to the threatened penalties, Iran warned this past week that it may disrupt traffic in the Strait of Hormuz, a vital Persian Gulf waterway. U.S. officials say that while they take all threats from Iran seriously, they view this latest warning as little more than saber rattling because disrupting the waterway would harm Iran’s economy.

The $662 billion bill authorizes money for military personnel, weapons systems, the wars in Afghanistan and Iraq and national security programs in the Energy Department for the fiscal year beginning Oct. 1.

The measure also freezes some $700 million in assistance until Pakistan comes up with a strategy to deal with improvised explosive devices.