Oh, I'm sure they are doing exactly that.
No but seriously. They do. It's the same with scanning your emails. They say they don't read it, but you do get targeted advertisement based on the content.
If it goes through the system, it stay in the system.
There isn't such thing as "delete" in conventional computers.
The data is still there.
Now that's something that can keep you up at night. People get hacked because a third party has an access to thier passwords be it by hacking or privacy invasion.
I think Google can keep passwords but to an extent because if you're the type of person that changes your password regularly, it will get to a point where it will just loose track on how many passwords you've deleted maybe to make room for more passwords. but hey what do i know Im not Google
Legally they are not, but, google lies. So... Maybe yes, probably yes they have them =V
Use keepass ;)