In July, the public learned that Goldman Sachs and several other large banks have morphed into giant merchants of physical goods, routinely shipping oil, running power plants, and amassing stocks of metals so large that Coca Cola accused them of hoarding. It was a disconcerting moment, as regulators realized that firms so recently known for their explosive mortgage-backed securities also deal in goods that can literally explode. These activities mean that banks supplying credit to businesses in the real economy were now also competing with them, opening up a Pandora’s box of perverse incentives and risks. Since the revelations, officials have cracked down, and the banks say they have moved to discard some of these mines and warehouses, returning to more traditional forms of banking.

But that was only half the story. What lawmakers and regulators missed is that it isn’t only the banks that have shifted shape. Over the last decade, some of the world’s biggest traditional traders in grains, oil, and metals have quietly taken on many attributes of banks—running billion-dollar hedge funds, launching private equity arms, and selling derivatives to clients. These businesses enable trading firms to tie up large sums of money in bets and profit off insider information. Unlike the banks, these companies have escaped regulatory scrutiny—even though experts say they present similar hazards.

Take the grain titan Cargill. The largest private company in the U.S., Cargill has gathered and shipped a bulk of the world’s supply of wheat and corn for more than 100 years. Nowadays, however, Cargill also sells billions in derivatives to food companies, and runs two massive hedge funds, managing more than $14 billion for investors. Or take Louis Dreyfus, another major grain trader. In 2008, Dreyfus launched its own fund enabling investors to bet on food prices. By 2011, the fund had grown so fast it stopped accepting new money.

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