Washington Mutual, the savings bank that helped rebuild Seattle after a disastrous fire in 1889, died and was almost immediately reincarnated by JPMorgan (JPM).

WaMu, as the bank with about 2,239 branches was affectionately known, died last September after choking on billions of dollars in option-ARM mortgages. The flexible loans, tasty during the housing boom, turned toxic in the downturn, gutting WaMu’s balance sheet and sending the bank’s stock price south.

WaMu’s failure set a new record for banking belly-flops, eclipsing the collapse of Continental Illinois in 1984, which had about $40 billion in assets. Washington Mutual had about $307 billion on the books when it croaked.

Customers withdrew about $16.7 billion from WaMu in the 10 days following the bankruptcy of Lehman Brothers last September - even though deposits up to $100,000 were insured by the FDIC.

JPMorgan agreed to pay $1.9 billion to Uncle Sam, banking’s guardian angel, for WaMu’s bank operations. However, Mighty Morgan is likely to twrite down about $31 billion in bad loans and raise about $8 billion in new capital.

This was good news for WaMu’s customers, who retained access to their money while JPMorgan performed its laying on of the hands - but bad news for the bank’s shareholders and creditors, who are likely to get nothing.

Last March, a takeover bid by Morgan was rejected by WaMu in favor of a cash infusion from TPG, a private-equity firm. TPG lost about $1.35 billion in the recent resurrection.

In the banking biz, that’s known as a bad bet.

JPMorgan’s decision to revive Washington Mutual wasn’t entirely altruistic: Picking up the corpse made the firm one of the largest banks in the US by deposits.

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Washington Mutual is survived by a skein of semi-conscious executives and a few board members of questionable competence.

Luckily, no memorial service will be needed; Washington Mutual’s branches will be rebranded as JPMorgan Chase.

All this may seem like nothing more than Wall Street shenanigans, but John Pierpont Morgan’s legacy lives. He’s credited with rounding up Wall Street bankers to backstop flagging finance houses during the stock market panic of 1907.

Much has changed in the intervening 102 years, but the stupidity that nearly sent Washington Mutual to its eternal rest remains a constant.