Misplaced loyalty which is based on guilt, will always come at a cost to our own personal, mental and emotional health. When anyone becomes biased towards a person or institution for the wrong reasons that loyalty becomes misplaced.
It can also happen out of personal feelings of guilt, though there is often no reason why that person should feel guilt, but loyalty if allowed to continue to be misplaced is dangerous, because not only will it leave us at the mercy of other people, but it can leave us at the mercy of those who benefit from our misplaced loyalty.
Any loyalty that becomes misplaced over time will put our integrity and sanity and at risk. It can also lead to serious psychological problems. Emotional trauma can lead to misplaced loyalty, particularly true in families; the most common form being towards parents. It is also linked to co-dependency. Misplaced loyalties if not changed can go on to affect our personal, social and professional lives.
Children who have been brought up by parents who are abusive, may develop misplaced loyalty issues towards their parents. In most misplaced loyalty cases, children may find it difficult to stand up against, or stop their parents from doing it. It is particularly true in inverted narcissism and co-dependency cases.
Although this may go back to our own childhood, which may need addressing, what all children need is a healthy sense of right and wrong, if each of us as part of society choose to act responsibly and morally, misplaced loyalty would be a thing of the past.