EtherChannel "on" mode can cause a bridging loop.

I thought EtherChannel's "on" mode was a good thing, in which no opportunity for unexpected malfunction, but it's not true.

Misconfigured EtherChannel can form a bridging loop, and STP EtherChannel Misconfig Guard cannot stop all bridging loops scenarios. It's recommended to use PAgP or LACP's negotiation (use "desirable non-silent" or "active") for inter-switch connections and prevent misconfigured ports from being active.

Reference:

How does a loop form in a misconfigured Etherchannel?

https://supportforums.cisco.com/thread/2055986

Understanding EtherChannel Inconsistency Detection

http://www.cisco.com/en/US/tech/tk389/tk213/technologies_tech_note09186a008009448d.shtml