According to White House sources, the Chubb insurance company, with which Mr Clinton had a policy that included a personal liability clause, agreed to pay out $475,000. The company had funded a part of his legal expenses in the case and funded the settlement at the cost to Mr Clinton of liquidating the policy.
Many Americans have insurance policies - whether for property, contents, or cars - that include provision for legal costs and personal liability in the event of the policy holder being found liable in a lawsuit. This type of insurance, which is both a cause and a consequence of the increasingly litigious nature of the United States, has driven up the cost of insurance in the US to the point where some companies offer discounts to limit or exclude legal costs and personal liability.
For the remaining $375,000, Mr Clinton drew on a blind trust - an investment portfolio held jointly by himself and his wife that had been placed under third party control for the duration of his presidency.
While the source of the money used to pay the Paula Jones settlement is essentially a private matter, the fact that it was leaked by the White House indicates it wanted the information in the public domain. The news seemed designed to convey several messages to Mr Clinton's supporters and to the public.
The first was that the President was meeting the costs of the Paula Jones case himself, and was not calling on either the charitable legal defence fund set up to help to defray his legal expenses or on rich friends for a loan. Either could land him in new political trouble.
The second was that the Clintons are not without resources of their own. Much has been made of the Clintons' contention that they lost money on the speculative Whitewater land deal in Arkansas, but more than a decade ago Hillary Clinton made almost instant profits in a cattle futures venture that was recommended to her by a friend and broker.
There were also reports that Mrs Clinton was especially disappointed by the Whitewater failure because she had hoped the investment would pay for their daughter Chelsea's university fees. College fees are a big expense for middle-class American parents.
The third message, given that the bulk of the money in the investment trust was said to come from Mrs Clinton's earnings as a lawyer in Arkansas, was that she was still "standing by her man" - even at the cost of their future financial security. Mrs Clinton was the main breadwinner through the Arkansas years, earning considerably more than her husband as governor of one of the poorest states in America.
The timing of the payment - which was reported to have been dispatched on Tuesday by Mr Clinton's lawyers - seemed designed to ensure that the Paula Jones case was closed before the drama of the Senate impeachment trial begins today. Ms Jones had instituted her case in 1995, stemming from an incident in the Arkansas capital, Little Rock, four years before when, she alleged, Mr Clinton had invited her to a hotel room and asked her to perform oral sex.Reuse content