The reasons why this should not be allowed:
1. It is against the law.
2. It is against most social networking sites to give or ask for others usernames and passwords.
3. Not hiring because of not giving out private account info is not right (What will be next asking for debit card pin numbers).
4. It also undermines the privacy expectations and the security of both the user and the user's friends.
Other things to keep in mind:
1. Do not allow companies to ask their current employees for their username and password.
2. Do not let companies fire these employees for not allowing the companies they work for, for this information.