Back in June, it was reported that Lehman Brothers was in talks with BlackRock about various mortgage-related securities. No deal ever emerged. Now comes word from CNBC that the two are once again in talks. It may be that Lehman Brothers is yearning for a Merrill Lynch-like deal to get rid of its collateralized debt obligation exposure once and for all (whether Merrill's deal does that is a matter of debate). It may be that BlackRock is driving a hard bargain here. I think we can assume that CDO valuations are lower now than in June. If the Merrill deal ends up setting a precedent, that would be good for all potential buyers out there, given the the generous financing that Merrill Lynch extended to Lone Star. BlackRock maybe in a position to ask for something similar.

For more:
- here's the CNBC article