Uh oh, there they go again.

In a repeat of their activity prior to the 2008-09 financial crisis, banks are lending money to institutional investors, such as hedge funds, to buy collateralized loan obligations (CLOs), The Wall Street Journal reports.

CLOs are debt securities that are generally backed by groups of low-rated loans.

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The banks offering loans to investors for CLO purchases include heavyweights Wells Fargo, RBC Capital Markets and Societe Generale, investors and bankers tell The Journal.

That kind of lending dwindled after the financial crisis, but started rebounding late last year, as banks lowered their loan rates, the paper says.

Banks hold approximately $130 billion of CLOs themselves and are seeking to dump them, as many CLOs are prohibited under the Dodd-Frank law's Volcker rule.

So the banks are essentially lending to investors to get them to take the CLOs off the banks' hands.

Banks "are resorting to creating economic incentives to get primarily hedge funds to step into this void," Oliver Wriedt, senior managing director at CIFC Asset Management, which manages CLOs, tells The Journal.

Banks are busy forming new CLOs too — $83 billion worth were issued in 2013, according to Fortune. The magazine's Cyrus Sanati doesn't see anything good coming out of this.

"Greed, stupidity, and slack government oversight fueled the mortgage bubble," he writes. "The same thing seems to be happening today, but this time with leveraged loans and junk bonds."

Editor's Note: These 38 Investments Have a 96% Win Rate

Related Stories:

• Bove: Fed Is the Problem When it Comes to CLOs Under Volcker Rule
• Fed Gives Banks More Time on Part of Volcker Rule