how to use hook_user_login to catch username and password
The information send in the login form is in the $edit array. You can get this information as follows:

function YOURMODULE_user_login(&amp;$edit, $account) {
  $username = $edit['input']['name'];
  $password = $edit['input']['pass'];
  drupal_set_message("Welcome $username your password is $password");
}