Today, Power Town sent a clear message to the financial world: Big is not better.

For many years now banks and brokerages have been beefing up, expanding globally, trying to reach a scale where they can compete with other huge financial players.

The most extreme example of this "big is better" philosophy has been the financial supermarket approach. That was Citi's plan -- offer everything from insurance to investment banking to mortgages. The idea was to become the world's biggest bank. And it seemed to work for a while.

But after the credit crisis, the Obama administration has concluded that big often means "too risky." And the current regulatory proposal aims at addressing this problem.

Here is a quote from a draft we got last night.

"Under our proposals, the largest, most interconnected, and highly leveraged institutions would face stricter prudential regulation than other regulated firms, including higher capital requirements and more robust consolidated supervision. In effect, our proposals would compel these firms to internalize the costs they could impose on society in the event of failure."

This is a huge shift of power -- economically and politically. It means that Washington is forcing the giants of Wall Street to pay up front for the risks they pose.

It is also a clear recognition that Power Town intends to run the show. No more dictation from the big banks. Expect them to fight back.

This will be a major battle and the one to watch to see if the balance of power has indeed permanently shifted in our economy.