Goldman Sachs ( GS) CEO Lloyd Blankfein called Citigroup's ( C) Vikram Pandit in September about a possible merger, but the Citigroup CEO immediately rejected the proposal, the Financial Times reported on its Web site.

Blankfein's call, placed not long after Lehman Brothers filed for bankruptcy protection on Sept. 15, was made with the knowledge of regulators but the conversation was brief as Pandit turned it down, the Financial Times reported, citing sources.

The call also was made shortly after Goldman received approval to convert itself into a commercial bank from a securities firm, the report added.

At the end of the month, the Treasury Department announced a $700 billion rescue package for the ailing U.S. banking system.

This article was written by a staff member of TheStreet.com.