The real issue of encryption isn't so much WHETHER or not data is encrypted (or hashed, as technically a password encryption is usually a one way hash and considered unrecoverable). The real issue is how and where the data are encrypted.
For instance, you can use a loop back mounted partition that's encrypted, which requires a passphrase and possibly a CD, usb dongle, or floppy with the key to be inserted on bootup to mount the partition. This helps ensure against the drive or machine being stolen, but doesn't stop people with db access from getting the data. Or you can do it on the front end server and pass the encrypted data back to the db server that way.
Or, you could put a 2 key system in place, where the db has the encryption key on input, but can't decrypt it, and the application has the other half of the key, so it can decrypt the data when it's been retrieved.
Generally speaking, passwords and financial data should always be encrypted in some way, but if your process is full of holes, then it's just for show. Gotta do security surveys and see what you're trying to accomplish before you start encrypting things if you want it to be useful.