I am wondering if postgres LDAP login is secure? Would passwords be transmitted in clear text potentially if this is not set up properly?
PostgreSQL LDAP authentication mechanism does not provide by itself security guarantee. The password used for DB is either plain text based or MD5 hashed. Your communication protocols do. But even if the communication is encrypted using SSL, it is better to hash your passwords with MD5 since you can always be sniffed or trapped using other methods.