The analysis notes that secured debt serves as a management bond that limits the risk of a firm's project. In contrast, it appears puzzling that many firms pay for unsecured credit even though they could have pledged assets to obtain seemingly less costly secured credit. However, in public firms, unsecured credit can serve as a bond to equity against managers' self-interested and incompetent behavior. Management provides this bond when it has a firm issue unsecured debt as an invitation to public scrutiny by potential general creditors, who are not complacent in the way that secured creditors are. This scrutiny can reduce equity's agency costs. If this hypothesis is correct, no reason exists to question the current legal system's enforcement of secured contracts in bankruptcy situations. Further research will support or refute this hypothesis. Footnotes (Author summary modified)