This is an opinion piece by Sheila Bair, former Chair of the FDIC.

Elizabeth Warren has announced an exploratory committee to seek the Democratic nomination for the presidency with a finely honed platform based on economic opportunity for the middle class.

She has a unifying message, extolling working families of all colors and origins to work together in their common economic interest. Her “big tent” rhetoric could pose a threat to President Donald Trump, who has built a political base by tapping into that same economic disaffection, but with a message that resonates primarily with voters who share his gender and race. With that misguided strategy, he has alienated working mothers, families of color, immigrant workers, and others who have been just as disadvantaged by the current system as high-school educated white males. Warren aims to bring them together in a potentially potent political coalition.

Warren’s critics on the right sniff that working class males will never support a socialist. But she is not a socialist. She is a Teddy Roosevelt-quoting, Oklahoman who believes in capitalism and markets. What she does want to change are government policies that have perverted our market-based system to benefit the wealthy and powerful. She is determined to make capitalism work again for everyone, as it did through the post-WWII era. Far from wanting to nationalize the system, she recognizes that government has been part of the problem by handing out benefits and favors to the privileged few.

A simpler, smaller, and more accountable financial system

The 2008/2009 big bank bailouts remain a symbol of the rigged system many believe our government has become. Perhaps one of Warren’s biggest advantages as a candidate is her financial expertise. A longstanding critic of the current financial system, she is one of the few people in elective politics who understands that system and has a workable plan to reform it. So what does Elizabeth Warren want that system to look like?

I have worked with Elizabeth Warren and her team for many years on financial issues, and this is how I believe she would reshape the banking system.

First, it would be smaller and simpler. Warren is supportive of community banks and credit unions, but she wants to break up the big guys. High on her list is a modern day version of Glass-Steagall, the landmark law enacted during the Great Depression that forced a separation of investment banking from commercial banking. While Warren supported the 2010 Dodd-Frank reform law for making incremental improvements, she believes its technocratic approach is less effective — and imposes more costs — than fundamental structural reform. Under Warren, expect big banks enjoying the benefits of deposit insurance and Federal Reserve lending to be broken up and banned from their high-risk derivatives and securities activities. If they want access to government safety net support, they will need to be boring again.

Warren’s banking system would be less leveraged. Excessive borrowing by large banks was widely recognized as a key driver of the 2008 financial crisis. Warren would beef up capital requirements and curb tax subsidies for highly leveraged banks. She would also end tax incentives for banks to pay their executives with huge, performance-based bonuses that too often reward short-term risk taking while compromising the bank’s long-term financial health.

New Bureau of Consumer Financial Protection director Kathy Kraninger speaks to media at the Bureau of Consumer Financial Protection offices in Washington, Tuesday, Dec. 11, 2018. (AP Photo/Carolyn Kaster) More

Warren’s banking system would be more consumer friendly. Warren would no doubt appoint a strong head of the Consumer Financial Protection Bureau. Created by Dodd-Frank, the bureau was her brainchild but has been seriously weakened under the current administration. She would also enable banks and credit unions to partner with the U.S. Post Office in offering basic financial financial services such as checking and savings accounts in postal facilities. Roughly six in 10 are located in areas that have either no bank facility or only one branch. Postal banking would broaden the provision of low-cost financial services to under-banked communities and give them alternatives to check-cashers for basic cash needs.