How do permanent negative levels work?

[Kaiwen]

Billy is a level 1 Monk. Billy levels up, and multiclasses into Paladin. Billy then wanders into a graveyard, has a nasty encounter with a wight, and horror of horrors, rolls a nat 1 to resist the negative level becoming permanent. Does Billy lose his most recent (Paladin) level? Can Billy choose to lose his Monk level? What rules I can find just say he loses a level.

[TalonOfAnathrax]

AFAIK there's no actual clear-cut answer to that question in the rules as written, but general consensus seems to be that it makes sense to lose newest levels first.
Nevertheless, he can arguably choose which level to lose if he wants to.

[Biggus]

The Rules Compendium (p.49) says that it's your most recent level which is lost.