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UPDATE 1-Powell rose to top of Trump's list as safe, savvy choice for Fed

(Updates with announcement of Powell as Fed chair)

WASHINGTON/NEW YORK, Nov 2 (Reuters) - Jerome Powell was not on President Donald Trump's early radar as a possible successor to Federal Reserve Chair Janet Yellen and was angling instead for a job as the U.S. central bank's vice chair for supervision.

But when he was passed over for that position last summer, it was one in a chain of events that left the 64-year-old Fed governor and investment banker on the cusp of taking over as head of the world's most powerful central bank.

Trump on Thursday nominated Powell to replace Yellen when her term expires in early February.

Other contenders fell for different reasons, as Trump soured on top White House economic adviser Gary Cohn, decided against re-appointing Yellen despite largely approving of her policies, and came to view two others as posing risks to the economy.

In the end it was Powell, a Maryland native, avid cyclist, and guitar hobbyist, who checked all the boxes that mattered but carried none of the negatives.

If confirmed by the U.S. Senate, Powell would become the first person without an advanced economics degree to hold the job since William Miller in the late 1970s.

A lawyer who lists personal assets of between $20 million and $60 million on government disclosure forms, Powell has worked in investment banking and served on corporate boards as a managing partner at the Carlyle Group, a private equity firm.

But he has also burrowed deep over the last five years into the nuts and bolts of central banking, and schooled himself on broader monetary policy issues.

"Jay does not come with baggage ... He has never been at the extremes," said Steve Bell, who worked with Powell at the Bipartisan Policy Center think tank and when Powell was at the Treasury Department in former President George H.W. Bush's administration.

When compared to other possible nominees, some of whom called for sweeping but ill-defined changes at the Fed, Powell took "a straight tactical line" that offered a continuation of Yellen's policies, a moderate approach to bank regulation and, perhaps most importantly, the prospect of no surprises, Bell said.

Powell's private-sector experience likely appealed as well to Trump's preference for business figures over those with Phds.

"He is not a guy who has a rule named after him. He is not a guy who has said in the past we'll have a bad reaction to quantitative easing and it is a disaster," Bell said in a reference to Stanford University economist John Taylor and former Fed Governor Kevin Warsh.

Taylor, who developed the "Taylor Rule" for guiding monetary policy, and Warsh, who resigned over the Fed's massive bond-buying stimulus program which many now credit with spurring the U.S. economy after the 2007-2009 recession, were interviewed for the Fed job.

They arguably had a head start, the backing of conservatives, and steady support from the Wall Street Journal's influential editorial board.

But they also carried the risk of financial market volatility, with investors regarding each as somebody who could tighten monetary policy at the central bank. That is something Trump has indicated he wants to avoid.

TRUMP CARDS

A former Fed official, contacted over the summer as part of the White House's Fed chief search, said it was clear the administration wasn't interested, for example, in Taylor and his reliance on "rules" that generally call for interest rates to be higher than they currently are.

The administration officials vetting Fed candidates were "very much opposed to Taylor-type rules and systematic policy," said the former official, who spoke on the condition of anonymity.

Warsh, meanwhile, became the target of an aggressive grassroots campaign that highlighted what some critics viewed as a history of bad calls on inflation during his tenure as a Fed policymaker, portending a tough confirmation fight.

Powell also benefited from burgeoning relationships through his work on the technical aspects of markets, and his assumption of the role as the Fed's regulatory point person after the resignation of former Fed Governor Daniel Tarullo in April.

That prompted Powell to initially set his sights on the job of vice chair for supervision, though it soon became clear he would not get it, according to a person who had discussions with White House and Fed officials involved in the process.

Yet Powell's close work with the Treasury resulted in Secretary Steven Mnuchin becoming a strong advocate of his nomination to the top job. Fed Governor Randal Quarles, a friend and colleague who got the vice chair job that Powell had wanted, also was an additional ally in the mix.

But it was Powell's support of the Yellen Fed's policies, often credited with paving the way for a 4.2 percent unemployment rate, steady economic growth and calm markets, that may have been his strongest advantage in the race.

"Trump is savvy enough to look at the numbers and who is in the chair," said Peter Conti-Brown, an assistant professor at the Wharton School of the University of Pennsylvania.

Powell solves the problem of a Republican administration that wants "the Yellen Fed without Yellen," Conti-Brown said.

(Reporting by Howard Schneider and Jonathan Spicer; Editing by Paul Simao)