President Donald Trump is taking aim at banking regulations, but former FDIC Chair Sheila Bair told CNBC on Wednesday instead of deregulation, the president should focus on “smart regulation.”

“There’s some things he can do in simplification that would be smart that would help the banks get some of the … unnecessary administrative costs out, but not do things like weaken capital standards. I think that would be very, very detrimental for the long-term health of our economy and for our resiliency,” she said in an interview with “Closing Bell.”

Trump has said he wants changes to the Dodd-Frank financial regulations, which were enacted following the 2008 financial crisis. In February, he signed an executive order that directed the Treasury secretary to submit a report on recommended changes in 120 days.

Bair, who served as chair of the Federal Deposit Insurance Corporation during the financial crisis, said things like the risk-based standards are “hideously complex” and “mislead investors to think that capital is much higher at banks than they are.”

She also called liquidity rules too complicated.

However, she warned that the country shouldn’t forget the lessons of the financial crisis.

“What drove this crisis was too much borrowing by banks and they were borrowing short term. Which means you’ve got to get the capital levels up and you’ve got to make sure they’ve got stable liquidity.”

Meanwhile, she thinks the Federal Reserve is making the right moves when it comes to raising interest rates, although she wishes Chair Janet Yellen did it sooner.

The central bank hiked rates another quarter point on Wednesday, taking the overnight funds rate to a target range of 0.75 percent to 1 percent.

“The economy is reasonable … unemployment looks good, inflation’s still just shy of their 2 percent. And so why shouldn’t she raise rates. I’m glad they did. I hope they keep doing it,” Bair said.

— CNBC’s Jeff Cox contributed to this report.