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<SEC-DOCUMENT>0000935069-05-002917.txt : 20051024
<SEC-HEADER>0000935069-05-002917.hdr.sgml : 20051024
<ACCEPTANCE-DATETIME>20051024125444
ACCESSION NUMBER:		0000935069-05-002917
CONFORMED SUBMISSION TYPE:	N-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050831
FILED AS OF DATE:		20051024
DATE AS OF CHANGE:		20051024
EFFECTIVENESS DATE:		20051024

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Flaherty & Crumrine PREFERRED INCOME OPPORTUNITY FUND INC
		CENTRAL INDEX KEY:			0000882071
		IRS NUMBER:				954355600
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		N-Q
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-06495
		FILM NUMBER:		051151412

	BUSINESS ADDRESS:	
		STREET 1:		301 E COLORADO BLVD STE 720
		STREET 2:		C/O FLAHERTY & CRUMRINE INC
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
		BUSINESS PHONE:		(626) 795-7300

	MAIL ADDRESS:	
		STREET 1:		301 COLORADO BLVD STE 720
		STREET 2:		C/O FLAHERTY & CRUMRINE INC
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PREFERRED INCOME OPPORTUNITY FUND INC
		DATE OF NAME CHANGE:	19920929
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-Q
<SEQUENCE>1
<FILENAME>pfonq.txt
<DESCRIPTION>FLAHERTY PFO NQ 08/31/05
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-Q

             QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
                         MANAGEMENT INVESTMENT COMPANY

                  Investment Company Act file number 811-06495
                                                    -----------------

       FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
   -------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

                      301 E. Colorado Boulevard, Suite 720
                               PASADENA, CA 91101
           ---------------------------------------------------------
               (Address of principal executive offices) (Zip code)

                               Donald F. Crumrine
                        Flaherty & Crumrine Incorporated
                      301 E. Colorado Boulevard, Suite 720
                               PASADENA, CA 91101
           ---------------------------------------------------------
                     (Name and address of agent for service)

        Registrant's telephone number, including area code: 626-795-7300
                                                          --------------

                   Date of fiscal year end: NOVEMBER 30, 2005
                                           ------------------

                    Date of reporting period: AUGUST 31, 2005
                                            -----------------

Form N-Q is to be used by  management  investment  companies,  other  than small
business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of
this chapter), to file reports with the Commission, not later than 60 days after
the close of the first and third fiscal quarters,  pursuant to rule 30b1-5 under
the Investment  Company Act of 1940 (17 CFR 270.30b1-5).  The Commission may use
the  information  provided  on Form N-Q in its  regulatory,  disclosure  review,
inspection, and policymaking roles.

A registrant is required to disclose the information  specified by Form N-Q, and
the Commission will make this  information  public. A registrant is not required
to respond to the  collection  of  information  contained in Form N-Q unless the
Form displays a currently  valid Office of Management and Budget ("OMB") control
number.  Please  direct  comments  concerning  the  accuracy of the  information
collection  burden  estimate and any  suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington,
DC 20549-0609.  The OMB has reviewed this  collection of  information  under the
clearance requirements of 44 U.S.C. ss. 3507.


<PAGE>


ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.

FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND


Dear Shareholder:

     During the third fiscal quarter of 2005, the Flaherty & Crumrine  Preferred
Income Opportunity Fund continued to deliver steady  performance.  For the three
month  period ended  August 31,  2005,  the Fund  produced a total return on net
asset value  ("NAV") of 0.8% 1.  During the first three quarters of fiscal 2005,
the Fund's return on NAV has been 9.1%.

     The  Fund's  interest  rate  hedging  strategy  normally  works  best  when
long-term interest rates are rising or falling.  In periods of relatively stable
long-term  interest rates,  such as we've  experienced for several quarters now,
the   costs   of   implementing   the   strategy   can  drag   down   investment
performance--much like paying on-going premiums on an insurance policy but never
making  a  claim.   Given  the  Fund's   policy  of   maintaining  a  continuing
interest-rate hedge on the portfolio, the Fund's NAV returns are respectable.
And don't forget, the Fund still owns the "insurance policy"!

     The country is still coming to grips with the impact of Hurricanes  Katrina
and Rita; our thoughts are very much with the victims of these terrible  events.
We are closely watching the effect on the Fund's investment  portfolio,  and, so
far, we have seen no material impact.  Insurance companies have become much more
adept at  managing  the  financial  risk  they face  from  hurricanes  and other
catastrophic  events.  While claims from the hurricanes certainly will adversely
impact insurance  industry  earnings,  we believe there is no threat to industry
solvency.  Utilities in the region should be able to recover most of the expense
they will incur in returning to operation from their customers. (The New Orleans
subsidiary of Entergy Corp. has filed for bankruptcy  protection;  however,  the
Fund does not own any securities issued by this company.) Changes in the banking
industry have  encouraged  companies to expand across state lines,  resulting in
larger,  healthier  banks  that  are  unlikely  to be  hurt  by the  hurricanes.
Diversification  across  companies,  industries  and  geography  is an important
element  of the  Fund's  investment  strategy,  and helps to limit the impact of
economic shocks, such as those delivered by Hurricanes Katrina and Rita.

     Recently, we have seen a pick-up in the supply of new preferred securities.
Some were issued simply to take advantage of the low level of long-term interest
rates and lock-in  attractive  financing  costs.  Other  issues,  however,  have
introduced  new twists to the  structure  that are  intended  to help the issuer
achieve  specific  financial  objectives.  Time will tell how broadly  these new
features get incorporated  into the market,  but for now, many of the recent new
issues have fit nicely into the Fund's investment portfolio.

     There  is not much new to  report  regarding  the  outlook  for the  Fund's
dividend rate. Several similar funds have recently reduced their dividends,  but
we don't  think any  change is  warranted  at  present  for  Flaherty & Crumrine
Preferred  Income  Opportunity  Fund. We encourage you to take  advantage of the
Fund's website, WWW.PREFERREDINCOME.COM.  It contains a wide range of useful and
up-to-date  information  about the Fund,  including the factors which impact the
Fund's  dividend  policy.  In addition,  the website  includes  summaries of the
Fund's investment objective,  its hedging strategy,  its use of leverage and the
risks applicable to the Fund.


Sincerely,

/S/ Donald F. Crumrine                 /S/ Robert M. Ettinger
Donald F. Crumrine                     Robert M. Ettinger
Chairman of the Board                  President

October 17, 2005



- --------------------------
     (1) Based on monthly data provided by Lipper Inc. Distributions are assumed
         to be reinvested at NAV in accordance with Lipper's practice.

<PAGE>

                             DIVIDEND REINVESTMENT:
                     BUILDING WEALTH ONE DIVIDEND AT A TIME


Flaherty  &  Crumrine  Preferred  Income  Opportunity  Fund  offers  a  Dividend
Reinvestment  and Cash Purchase Plan,  unglamorously  nicknamed the "DRIP",  for
those investors who desire a steady, reliable approach to building wealth.


Why invest in the DRIP?


     o Disciplined monthly investing in both good and bad markets,

     o When shares trade below the NAV, the Fund purchases shares in the market,

     o When shares  trade above the NAV,  shares are issued at the higher of NAV
       or 95% of the market price. Participating shareholders get the benefit!

     o $1,000 invested at inception,  February 1992, with dividend  reinvestment
       would  be  worth  over  $3,800  as  of August 31, 2005 (10.48% annualized
       return).

To obtain  information on the DRIP,  contact your brokerage firm and ask if they
are set up to  participate.  Information can also be found on the Fund's website
at WWW.PREFERREDINCOME.COM. Select the appropriate Fund and then select the link
"Dividend  Reinvestment Plan". For investors who hold their shares in registered
form, contact the DRIP's agent, PFPC Inc., at 1-800-331-1710.


Past  performance is no guarantee of future results.  Participation  in the DRIP
does  not  relieve  the  investor  of  any  income  tax   associated   with  the
distribution.  For  additional  performance  information  please  refer  to  the
attached quarterly report.

                                        2

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PORTFOLIO OVERVIEW
AUGUST 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------

FUND STATISTICS ON 08/31/05
- --------------------------------------------------------------------------------
Net Asset Value               $      12.66

Market Price                  $      13.50

Premium                               6.64%

Yield on Market Price                 6.27%

Common Shares
Outstanding                     11,658,470


INDUSTRY CATEGORIES                    % OF PORTFOLIO
- --------------------------------------------------------------------------------


                                [GRAPHIC OMITTED]
     EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Utilities               40%
Banks                   23%
Insurance               15%
Financial Services      10%
Oil and Gas              7%
Other                    3%
REITs                    2%

MOODY'S RATINGS             % OF PORTFOLIO
- --------------------------------------------------------------------------------
AAA                           0.3%
AA                            3.7%
A                            19.6%
BBB                          48.8%
BB                           17.1%
Not Rated                     9.5%
- --------------------------------------------------------------------------------
Below Investment Grade*      18.5%

* BELOW INVESTMENT GRADE BY BOTH MOODY'S AND
S&P.


TOP 10 HOLDINGS BY ISSUER               % OF PORTFOLIO
- --------------------------------------------------------------------------------
Interstate Power                              5.3%
Lehman Brothers                               4.5%
Alabama Power                                 4.3%
Xcel Energy                                   3.8%
Principal Financial Group                     3.4%
EOG Resources                                 3.0%
Cobank                                        3.0%
North Fork Bancorporation                     3.0%
UnumProvident                                 2.8%
ABN AMRO                                      2.5%


<TABLE>
<CAPTION>


                                                                                                     % OF PORTFOLIO**
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                               <C>
Holdings Generating Qualified Dividend Income (QDI) for Individuals                                               75%
Holdings Generating Income Eligible for the Corporate Dividend Received Deduction (DRD)                           73%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
**       THIS DOES NOT REFLECT YEAR-END RESULTS OR ACTUAL TAX CATEGORIZATION  OF
         FUND  DISTRIBUTIONS. THESE  PERCENTAGES CAN,  AND  DO, CHANGE,  PERHAPS
         SIGNIFICANTLY, DEPENDING ON MARKET CONDITIONS. INVESTORS SHOULD CONSULT
         THEIR TAX ADVISOR REGARDING THEIR PERSONAL SITUATION.
</FN>
</TABLE>

                                        3

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PORTFOLIO OF INVESTMENTS
AUGUST 31, 2005 (UNAUDITED)
- ------------------------------------------------------------------

<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- 96.7%
               BANKING -- 22.7%
- ------------------------------------------------------------------------------------------------------------------------------------
               ABN AMRO North America, Inc.:
        1,165    6.46% Pfd., 144A**** ..........................................................   $      1,205,111*
        4,200    6.59% Pfd., 144A**** ..........................................................          4,336,731*
$     150,000  BT Capital Trust B, 7.90% 01/15/27 Capital Security .............................            161,054(1)
$     660,000  BT Preferred Capital Trust II, 7.875% 02/25/27 Capital Security .................            712,328(1)
$     250,000  Chase Capital I, 7.67% 12/01/26 Capital Security ................................            268,427
               Citigroup, Inc.:
        7,700    6.213% Pfd., Series G .........................................................            398,244*
       46,000    6.231% Pfd., Series H .........................................................          2,402,580*
       29,850    6.365% Pfd., Series F .........................................................          1,561,453*
               Cobank, ACB:
       45,000    7.00% Pfd., 144A**** ..........................................................          2,392,650*
       75,000    Adj. Rate Pfd., 144A**** ......................................................          4,179,375*
$     500,000  Comerica (Imperial) Capital Trust I, 9.98% 12/31/26 Capital Security, Series B ..            571,260
        1,500  FBOP Corporation, Adj. Rate Pfd., 144A**** ......................................          1,503,750*
$   2,250,000  First Hawaiian Capital I, 8.343% 07/01/27 Capital Security, Series B ............          2,468,036(1)
               First Republic Bank:
      200,000    6.25% Pfd. ....................................................................          5,181,000*
        5,000    6.70% Pfd. ....................................................................            129,950*
$     719,000  First Union Institutional Capital I, 8.04% 12/01/26 Capital Security ............            776,930
$   1,885,000  First Union Institutional Capital II, 7.85% 01/01/27 Capital Security ...........          2,035,169
$   4,349,000  GreenPoint Capital Trust I, 9.10% 06/01/27 Capital Security .....................          4,848,526
$   2,500,000  HBOS Capital Funding LP, 6.85% Pfd. .............................................          2,586,887(1)
       36,500  J.P. Morgan Chase & Co., 6.625% Pfd., Series H ..................................          1,867,158*
$   2,000,000  Keycorp Capital VII, 5.70% 06/15/35 Capital Security ............................          1,980,890
$   1,350,000  Keycorp Institutional Capital B, 8.25% 12/15/26 Capital Security ................          1,461,578
$   1,500,000  North Fork Capital Trust I, 8.70% 12/15/26 Capital Security .....................          1,637,648
       16,000  PFGI Capital Corporation, 7.75% Pfd. ............................................            437,200
$   1,700,000  RBS Capital Trust B, 6.80% Pfd. .................................................          1,749,181**(1)
           10  Roslyn Real Estate, 8.95% Pfd., Pvt., Series C, 144A**** ........................          1,130,254
$   1,200,000  Wachovia Capital Trust V, 7.965% 06/01/27 Capital Security, 144A**** ............          1,312,932
- -------------------------------------------------------------------------------------------------------------------
                                                                                                         49,296,302
                                                                                                   ----------------
               FINANCIAL SERVICES -- 10.3%
- ------------------------------------------------------------------------------------------------------------------------------------
      175,000  CIT Group, Inc., 6.35% Pfd., Series A ...........................................          4,543,875*
               Freddie Mac:
       33,125    5.00% Pfd., Series F ..........................................................          1,534,019*
       42,650    5.30% Pfd. ....................................................................          2,086,011*
</TABLE>

                                       4

<PAGE>

- --------------------------------------------------------------------------------
              Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
                                            PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                     AUGUST 31, 2005 (UNAUDITED)
                                            ------------------------------------
<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- (CONTINUED)
               FINANCIAL SERVICES -- (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
               Lehman Brothers Holdings, Inc.:
        5,150    5.67% Pfd., Series D ..........................................................   $        262,161*
      159,505    5.94% Pfd., Series C ..........................................................          8,276,714*
       44,000    6.50% Pfd., Series F ..........................................................          1,161,380*
       20,000  National Rural Utility CFC, 5.95% Pfd. 02/15/45 .................................            490,600
       70,900  SLM Corporation, 6.97% Pfd., Series A ...........................................          3,989,898*
- -------------------------------------------------------------------------------------------------------------------
                                                                                                         22,344,658
                                                                                                   ----------------
               INSURANCE -- 14.8%
- ------------------------------------------------------------------------------------------------------------------------------------
       20,000  ACE Ltd., 7.80% Pfd., Series C ..................................................            533,500**(1)
       25,000  Aegon NV, 6.375% Pfd. ...........................................................            646,000**(1)
$   2,000,000  AON Capital Trust A, 8.205% 01/01/27 Capital Security ...........................          2,367,620
       16,000  Berkley W.R. Capital Trust II, 6.75% 07/26/45 ...................................            402,160
       15,850  Everest Re Capital Trust II, 6.20% Pfd., Series B ...............................            385,868(1)
      140,000  MetLife Inc., 6.50% Pfd., Series B ..............................................          3,649,100*
$   4,395,000  MMI Capital Trust I, 7.625% 12/15/27 Capital Security, Series B .................          5,112,506
      275,000  Principal Financial Group, 6.518% Pfd. ..........................................          7,466,250*
$   5,734,000  Provident Financing Trust I, 7.405% 03/15/38 Capital Security ...................          5,242,797
       89,000  Scottish Re Group Ltd., 7.25% Pfd. ..............................................          2,249,920**(1)
               Zurich RegCaPS Funding Trust:
        1,250    6.01% Pfd., 144A**** ..........................................................          1,251,744*
        2,800    6.58% Pfd., 144A**** ..........................................................          2,968,280*
- -------------------------------------------------------------------------------------------------------------------
                                                                                                         32,275,745
                                                                                                   ----------------
               UTILITIES -- 39.4%
- ------------------------------------------------------------------------------------------------------------------------------------
               Alabama Power Company:
        4,980    4.60% Pfd. ....................................................................            466,626*
        6,485    4.72% Pfd. ....................................................................            623,500*
          868    4.92% Pfd. ....................................................................             86,991*
       98,400    5.20% Pfd. ....................................................................          2,512,644*
      225,000    5.30% Pfd. ....................................................................          5,745,375*
        6,000  Baltimore Gas & Electric Company, 6.70% Pfd., Series 1993 .......................            624,660*
        1,628  Central Hudson Gas & Electric Corporation, 4.35% Pfd., Series D, Pvt. ...........            152,731*
        3,798  Central Maine Power Company, 4.75% Pfd. .........................................            361,759*
       16,679  Central Vermont Public Service Corporation, 8.30% Sinking Fund Pfd., Pvt. .......          1,734,783*
</TABLE>

                                       5

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 2005 (UNAUDITED)
- ------------------------------------------------------------------

<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- (CONTINUED)
               UTILITIES -- (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
               Connecticut Light & Power Company:
        2,050    4.50% Pfd., Series 1956 .......................................................   $         86,735*
       25,000    5.28% Pfd., Series 1967 .......................................................          1,223,750*
          883    $2.04 Pfd., Series 1949 .......................................................             33,876*
        2,900    $2.20 Pfd., Series 1949 .......................................................            119,973*
        9,652    $3.24 Pfd. ....................................................................            502,966*
        2,000  Consolidated Edison Company of New York, 4.65% Pfd., Series C ...................            188,740*
        7,500  Dayton Power and Light Company, 3.90% Pfd., Series C ............................            562,875*
               Duke Energy Corporation:
        5,000    4.50% Pfd., Series C, Pvt. ....................................................            476,250*
       34,943    7.85% Pfd., Series S ..........................................................          3,594,412*
               Duquesne Light Company:
       15,030    3.75% Pfd. ....................................................................            527,252*
       25,775    6.50% Pfd. ....................................................................          1,373,292*
        5,000  Energy East Capital Trust I, 8.25% Pfd. .........................................            129,750
               Entergy Arkansas, Inc.:
        2,840    4.56% Pfd. ....................................................................            258,866*
        3,050    4.56% Pfd., Series 1965 .......................................................            278,007*
        1,150    6.08% Pfd. ....................................................................            119,617*
       14,225    7.40% Pfd. ....................................................................          1,480,040*
        5,880    7.80% Pfd. ....................................................................            615,019*
        2,265    7.88% Pfd. ....................................................................            236,387*
       24,314    $1.96 Pfd. ....................................................................            608,458*
        2,441  Entergy Gulf States, Inc., 7.56% Pfd. ...........................................            248,457*
               Entergy Louisiana, Inc.:
          299    5.16% Pfd. ....................................................................             31,018*
          943    6.44% Pfd. ....................................................................             97,709*
        4,174    7.36% Pfd. ....................................................................            434,326*
      175,000    8.00% Pfd., Series 92 .........................................................          4,413,500*
               Entergy Mississippi, Inc.:
        4,616    4.36% Pfd. ....................................................................            355,386*
        5,000    4.92% Pfd. ....................................................................            434,400*
       10,900  Enterprise Capital Trust I, 7.44% Pfd., Series A ................................            277,677
               Florida Power Company:
       10,000    4.58% Pfd. ....................................................................            961,200*
        2,000    4.75% Pfd. ....................................................................            198,320*
               Great Plains Energy, Inc.:
        1,625    4.20% Pfd. ....................................................................            133,941*
        2,000    4.35% Pfd. ....................................................................            170,740*
</TABLE>

                                       6

<PAGE>

- --------------------------------------------------------------------------------
              Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
                                            PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                     AUGUST 31, 2005 (UNAUDITED)
                                            ------------------------------------


<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- (CONTINUED)
               UTILITIES -- (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
               Hawaiian Electric Company, Inc.:
        1,611    5.00% Pfd., Series D ..........................................................   $         32,744*
        7,438    5.00% Pfd., Series E ..........................................................            151,177*
          690    5.00% Pfd., Series I ..........................................................             14,024*
$   3,750,000  Houston Light & Power Capital Trust II, 8.257% 02/01/37 Capital Security ........          4,046,794
       30,500  Indianapolis Power & Light Company, 5.65% Pfd. ..................................          2,951,485*
      340,000  Interstate Power & Light Company, 8.375% Pfd., Series B .........................         11,510,700*
        2,588  New York State Electric & Gas, $4.50 Pfd., Series 1949 ..........................            239,558*
       12,265  Northern Indiana Public Service Company, Adj. Rate Pfd., Series A ...............            619,689*
               Ohio Power Company:
        3,018    4.20% Pfd. ....................................................................            269,854*
        1,251    4.40% Pfd. ....................................................................            117,181*
               Pacific Enterprises:
       13,680    $4.36 Pfd. ....................................................................          1,156,097*
       24,985    $4.50 Pfd. ....................................................................          2,179,317*
       15,730    $4.75 Pfd., Series 53 .........................................................          1,448,261*
               Pacific Gas & Electric Co.:
       41,500    5.00% Pfd., Series D ..........................................................            937,692*
       50,000    5.00% Pfd., Series E ..........................................................          1,150,500*
               PacifiCorp:
        5,672    $4.56 Pfd. ....................................................................            509,034*
        6,708    $4.72 Pfd. ....................................................................            623,140*
       10,500    $7.48 Sinking Fund Pfd. .......................................................          1,106,017*
        1,250  PECO Energy Company, $4.30 Pfd., Series B .......................................            108,194*
       15,142  Portland General Electric, 7.75% Sinking Fund Pfd. ..............................          1,544,181*
       14,020  Public Service Electric & Gas Company, 5.28% Pfd., Series E .....................          1,451,701*
       70,210  San Diego Gas & Electric Company, $1.70 Pfd. ....................................          1,823,354*
        8,900  Savannah Electric & Gas Company, 6.00% Pfd. .....................................            243,993*
               South Carolina Electric & Gas Company:
       14,226    5.125% Purchase Fund Pfd., Pvt. ...............................................            731,857*
        7,774    6.00% Purchase Fund Pfd., Pvt. ................................................            396,241*
               Southern California Edison:
       57,646    4.08% Pfd. ....................................................................          1,137,356*
        5,000    4.24% Pfd. ....................................................................            102,500*
       16,225    Adj. Rate Pfd. ................................................................          1,667,086*
       60,000  Southern Union Company, 7.55% Pfd. ..............................................          1,665,600*
$     750,000  TXU Electric Capital V, 8.175% 01/30/37 Capital Security ........................            807,686
        5,700  Union Electric Company, 4.56% Pfd. ..............................................            537,767*
</TABLE>

                                       7

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 2005 (UNAUDITED)
- ------------------------------------------------------------------

<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- (CONTINUED)
               UTILITIES -- (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
               Virginia Electric & Power Company:
        1,665    $4.04 Pfd. ....................................................................   $        139,935*
        2,470    $4.20 Pfd. ....................................................................            215,816*
        1,673    $4.80 Pfd. ....................................................................            168,814*
        2,878    $6.98 Pfd. ....................................................................            295,786*
       12,500    $7.05 Pfd. ....................................................................          1,280,625*
        2,262  Washington Gas & Light Company, $4.25 Pfd. ......................................            201,273*
       12,863  Wisconsin Power & Light, 6.20% Pfd. .............................................          1,319,937*
               Xcel Energy, Inc.:
       15,000    $4.08 Pfd., Series B ..........................................................          1,238,250*
       20,040    $4.10 Pfd., Series C ..........................................................          1,662,418*
       35,510    $4.11 Pfd., Series D ..........................................................          2,952,657*
       17,750    $4.16 Pfd., Series E ..........................................................          1,493,929*
       10,000    $4.56 Pfd., Series G ..........................................................            922,550*
- -------------------------------------------------------------------------------------------------------------------
                                                                                                         85,654,778
                                                                                                   ----------------
               OIL AND GAS -- 5.9%
- ------------------------------------------------------------------------------------------------------------------------------------
       17,200  Anadarko Petroleum Corporation, 5.46% Pfd. ......................................          1,767,300*
        6,650  Apache Corporation, 5.68% Pfd., Series B ........................................            685,415*
        8,000  Devon Energy Corporation, 6.49% Pfd., Series A ..................................            823,600*
        6,125  EOG Resources, Inc., 7.195% Pfd., Series B ......................................          6,589,765*
$   1,650,000  KN Capital Trust III, 7.63% 4/15/28 Capital Security ............................          1,908,770
       10,000  Lasmo America Limited, 8.15% Pfd., 144A**** .....................................          1,126,150*(1)
- -------------------------------------------------------------------------------------------------------------------
                                                                                                         12,901,000
                                                                                                   ----------------
               REAL ESTATE INVESTMENT TRUST (REIT) -- 1.7%
- ------------------------------------------------------------------------------------------------------------------------------------
               PS Business Parks, Inc.:
       10,000    7.00% Pfd., REIT, Series H ....................................................            250,350
       18,120    7.20% Pfd., REIT, Series M ....................................................            456,352
               Public Storage, Inc.:
       11,100    6.18% Pfd., REIT, Series D ....................................................            269,563
       22,500    6.75% Pfd., REIT, Series E ....................................................            571,613
       40,000  Realty Income Corporation, 7.375% Pfd., REIT, Series D ..........................          1,047,800
       40,000  Regency Centers Corporation, 7.25% Pfd., REIT ...................................          1,029,400
- -------------------------------------------------------------------------------------------------------------------
                                                                                                          3,625,078
                                                                                                   ----------------
</TABLE>

                                       8

<PAGE>

- --------------------------------------------------------------------------------
              Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
                                            PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                     AUGUST 31, 2005 (UNAUDITED)
                                            ------------------------------------

<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
PREFERRED SECURITIES -- (CONTINUED)
               MISCELLANEOUS INDUSTRIES -- 1.9%
- ------------------------------------------------------------------------------------------------------------------------------------
       13,600  E.I. Du Pont de Nemours and Company, $4.50 Pfd., Series B .......................   $      1,261,672*
       36,200  Farmland Industries, Inc., 8.00% Pfd., 144A**** .................................             18,100*+
       30,500  Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A**** .............................          2,872,185*
       26,000  Touch America Holdings, $6.875 Pfd. .............................................                --*+
- -------------------------------------------------------------------------------------------------------------------
                                                                                                          4,151,957
                                                                                                   ----------------
               TOTAL PREFERRED SECURITIES
                 (Cost $192,947,501) ...........................................................        210,249,518
                                                                                                   ----------------
CORPORATE DEBT SECURITIES -- 1.5%
               OIL AND GAS -- 1.0%
- ------------------------------------------------------------------------------------------------------------------------------------
       85,900  Nexen, Inc., 7.35% Subordinated Notes ...........................................          2,261,318(1)
- -------------------------------------------------------------------------------------------------------------------
               UTILITIES -- 0.5%
- ------------------------------------------------------------------------------------------------------------------------------------
$   1,000,000  Duquesne Light Holdings, 6.25% 08/15/35 .........................................          1,034,970
- -------------------------------------------------------------------------------------------------------------------
               TOTAL CORPORATE DEBT SECURITIES
                 (Cost $3,241,538) .............................................................          3,296,288
                                                                                                   ----------------
COMMON STOCK AND CONVERTIBLE SECURITY -- 0.8%
               BANKING -- 0.4%
- ------------------------------------------------------------------------------------------------------------------------------------
       50,000  New York Community Bancorp, Inc. ................................................            876,250*
- -------------------------------------------------------------------------------------------------------------------
                                                                                                            876,250
                                                                                                   ----------------
               INSURANCE -- 0.4%
- ------------------------------------------------------------------------------------------------------------------------------------
       25,000  UnumProvident Corporation, 8.25% Mandatory Convertible, 05/16/06 ................            931,375
- -------------------------------------------------------------------------------------------------------------------
                                                                                                            931,375
                                                                                                   ----------------
               TOTAL COMMON STOCK AND CONVERTIBLE SECURITY
                 (Cost $1,724,355) .............................................................          1,807,625
                                                                                                   ----------------
</TABLE>

                                       9
<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 2005 (UNAUDITED)
- ------------------------------------------------------------------

<TABLE>
<CAPTION>

SHARES/$ PAR                                                                                                VALUE
- -------------                                                                                             ---------
<S>             <C>                                                                                <C>
OPTION CONTRACTS -- 0.2%
        1,375  December Put Options on December U.S. Treasury Bond Futures,
                 Expiring 11/22/05 .............................................................   $        453,516+
- -------------------------------------------------------------------------------------------------------------------
               TOTAL OPTION CONTRACTS
                 (Cost $1,425,675) .............................................................            453,516
                                                                                                   ----------------
MONEY MARKET FUND -- 0.3%
      628,140  BlackRock Provident Institutional, TempFund .....................................            628,140
- -------------------------------------------------------------------------------------------------------------------
               TOTAL MONEY MARKET FUND
                 (Cost $628,140) ...............................................................            628,140
                                                                                                   ----------------

 TOTAL INVESTMENTS (Cost $199,967,209***) ...........................................      99.5%        216,435,087
 OTHER ASSETS AND LIABILITIES (Net) .................................................       0.5%          1,110,214
                                                                                      ---------    ----------------
 TOTAL NET ASSETS AVAILABLE TO COMMON AND PREFERRED STOCK ...........................     100.0%++ $    217,545,301
                                                                                      ---------    ----------------
 MONEY MARKET CUMULATIVE PREFERRED STOCK(TM) (MMP(R)) REDEMPTION VALUE .........................        (70,000,000)
                                                                                                   ----------------
 TOTAL NET ASSETS AVAILABLE TO COMMON STOCK ....................................................   $    147,545,301
                                                                                                   ================
</TABLE>
- -----------------------------
*      Securities eligible for the Dividends Received Deduction and distributing
       Qualified Dividend Income.
**     Securities distributing Qualified Dividend Income only.
***    Aggregate cost of securities held.
****   Securities exempt from registration under Rule 144A of the Securities Act
       of  1933.  These  securities  may  be  resold in transactions exempt from
       registration to qualified institutional buyers.
(1)    Foreign Issuer.
+      Non-income producing.
++     The percentage shown for each investment  category is the  total value of
       that  category  as  a  percentage  of  net assets available to Common and
       Preferred Stock.

        ABBREVIATIONS:
REIT -- Real Estate Investment Trust
PFD. -- Preferred Securities
PVT. -- Private Placement Securities


                                       10

<PAGE>

- --------------------------------------------------------------------------------
              Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
                 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE TO COMMON STOCK(1)
        FOR THE PERIOD FROM DECEMBER 1, 2004 THROUGH AUGUST 31, 2005 (UNAUDITED)
        ------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                                             VALUE
                                                                                                            --------
<S>                                                                                                  <C>
OPERATIONS:
     Net investment income ........................................................................  $     8,498,341
     Net realized gain on investments sold during the period ......................................        5,503,484
     Change in net unrealized appreciation of investments held during the period ..................           11,139
     Distributions to Money Market Cumulative PreferredTM Stock
         Shareholders from net investment income, including changes in
         accumulated undeclared distributions .....................................................       (1,401,795)
                                                                                                     ---------------
     NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .........................................       12,611,169

DISTRIBUTIONS:
     Dividends paid from net investment income to Common Stock Shareholders (2) ...................       (8,133,583)
                                                                                                     ---------------
     TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .............................................       (8,133,583)

FUND SHARE TRANSACTIONS:
     Increase from Common Stock Transactions ......................................................          922,663
                                                                                                     ---------------
     NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK RESULTING
         FROM FUND SHARE TRANSACTIONS .............................................................          922,663


NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK
                                                                                                     ---------------
     FOR THE PERIOD ...............................................................................  $     5,400,249
                                                                                                     ===============




- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE TO COMMON STOCK:
     Beginning of period ..........................................................................  $   142,145,052
     Net increase during the period ...............................................................        5,400,249
                                                                                                     ---------------
     End of period ................................................................................  $   147,545,301
                                                                                                     ===============
<FN>
- --------------------------------------------------------
(1) These tables  summarize  the nine months ended August 31, 2005 and should be
    read in conjunction  with the Fund's audited financial statements, including
    footnotes,  in its Annual Report dated  November 30, 2004.
(2) Includes income earned, but not paid out, in prior fiscal year.
</FN>
</TABLE>

                                       11

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
FINANCIAL HIGHLIGHTS(1)
FOR THE PERIOD FROM DECEMBER 1, 2004 THROUGH AUGUST 31, 2005 (UNAUDITED)
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD.
- -----------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                                                   <C>
PER SHARE OPERATING PERFORMANCE:
     Net asset value, beginning of period .........................................................   $       12.27
                                                                                                      -------------
INVESTMENTOPERATIONS:
     Net investment income ........................................................................            0.73
     Net realized and unrealized gain on investments ..............................................            0.48
DISTRIBUTIONS TO MMP(R)* SHAREHOLDERS:
     From net investment income ...................................................................           (0.12)
     From net realized capital gains ..............................................................              --
                                                                                                      -------------
     Total from investment operations .............................................................            1.09
                                                                                                      -------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
     From net investment income ...................................................................           (0.70)
     From net realized capital gains ..............................................................              --
                                                                                                      -------------
     Total distributions to Common Stock Shareholders  . ..........................................           (0.70)
                                                                                                      -------------
     Net asset value, end of period ...............................................................   $       12.66
                                                                                                      =============
     Market value, end of period ..................................................................   $       13.50
                                                                                                      =============
     Common shares outstanding, end of period .....................................................      11,658,470
                                                                                                      =============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS:
     Net investment income + ......................................................................            6.43%**
     Operating expenses ...........................................................................            1.54%**
- --------------------------------------------------------
SUPPLEMENTAL DATA:++
     Portfolio turnover rate ......................................................................              36%***
     Total net assets available to Common and Preferred Stock, end of period (in 000's) ...........   $     217,545
     Ratio of operating expenses to total average net assets available to
         Common and Preferred Stock ...............................................................            1.04%**

<FN>
(1) These tables  summarize  the nine months ended August 31, 2005 and should be
    read in conjunction with the Fund's audited financial statements,  including
    footnotes,  in its  Annual  Report  dated  November  30,  2004.
*   Money  Market Cumulative PreferredTM Stock.
**  Annualized.
*** Not Annualized.
+   The  net  investment income  ratio reflects income net of operating expenses
    and payments  to  MMP(R)*  Shareholders.
++  Information  presented  under  heading Supplemental Data includes MMP(R)*.
- --------------------------------------------------------------------------------
</FN>
</TABLE>

                                       12

<PAGE>

- --------------------------------------------------------------------------------
              Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
                                                FINANCIAL HIGHLIGHTS (CONTINUED)
                                           PER SHARE OF COMMON STOCK (UNAUDITED)
                                           -------------------------------------

<TABLE>
<CAPTION>

                                                      TOTAL                                             DIVIDEND
                                                    DIVIDENDS       NET ASSET          NYSE           REINVESTMENT
                                                      PAID            VALUE        CLOSING PRICE         PRICE(1)
                                                   -----------      ----------    ---------------    ---------------
<S>                                                 <C>              <C>              <C>                <C>
December 31, 2004 - EXTRA .......................   $0.0450          $12.58           $13.50             $12.83
December 31, 2004 ...............................    0.0755           12.58            13.50              12.83
January 31, 2005 ................................    0.0755           12.78            13.59              12.91
February 28, 2005 ...............................    0.0755           12.74            13.85              13.16
March 31, 2005 ..................................    0.0755           12.65            11.91              12.39
April 30, 2005 ..................................    0.0705           12.75            12.50              12.67
May 31, 2005 ....................................    0.0705           12.78            12.92              12.78
June 30, 2005 ...................................    0.0705           12.69            12.88              12.69
July 31, 2005 ...................................    0.0705           12.42            13.25              12.59
August 31, 2005 .................................    0.0705           12.66            13.50              12.83
<FN>
- --------------------
 (1) Whenever  the net asset value per share of the Fund's  Common Stock is less
     than or equal to the market price per share on the payment date, new shares
     issued  will be valued at the higher of net asset  value or 95% of the then
     current market price.  Otherwise,  the reinvestment  shares of Common Stock
     will be purchased in the open market.
</FN>
</TABLE>

                                       13

<PAGE>

- --------------------------------------------------------------------------------
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ----------------------------------------

1. AGGREGATE INFORMATION FOR FEDERAL INCOME TAX PURPOSES

   At August 31, 2005,  the aggregate  cost of securities for federal income tax
purposes was $200,975,880,  the aggregate gross unrealized  appreciation for all
securities  in which  there is an excess of value over tax cost was  $21,355,089
and the aggregate  gross  unrealized  depreciation  for all  securities in which
there is an excess of tax cost over value was $5,895,882.




                                       14

<PAGE>

                      [This page intentionally left blank]

<PAGE>

DIRECTORS
   Donald F. Crumrine, CFA
   David Gale
   Morgan Gust
   Karen H. Hogan
   Robert F. Wulf, CFA

OFFICERS
   Donald F. Crumrine, CFA
     Chairman of the Board
     and Chief Executive Officer
   Robert M. Ettinger, CFA
     President
   R. Eric Chadwick, CFA
     Chief Financial Officer,
     Vice President, Treasurer and Secretary
   Peter C. Stimes, CFA
     Chief Compliance Officer and Vice President
   Chad C. Conwell
     Vice President and Asst. Compliance Officer
   Bradford S. Stone
     Vice President and Asst. Treasurer
   Christopher D. Ryan, CFA
     Vice President
   Laurie Lodolo
     Asst. Compliance Officer,
     Asst. Treasurer and Asst. Secretary

INVESTMENT ADVISER
   Flaherty & Crumrine Incorporated
   e-mail: flaherty@pfdincome.com

QUESTIONS CONCERNING YOUR SHARES OF FLAHERTY &
   CRUMRINE PREFERRED INCOME OPPORTUNITY
   FUND?
   o If your shares are held in a Brokerage
     Account, contact your Broker.
   o If you have physical possession of your shares
     in certificate form, contact the Fund's Transfer
     Agent & Shareholder Servicing Agent --
               PFPC Inc.
               P.O. Box 43027
               Providence, RI 02940-3027
               1-800-331-1710

THIS  REPORT IS SENT TO  SHAREHOLDERS  OF FLAHERTY &
CRUMRINE  PREFERRED  INCOME OPPORTUNITY  FUND
INCORPORATED FOR THEIR  INFORMATION.  IT IS NOT A
PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR
USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR
OF ANY SECURITIES MENTIONED IN THIS REPORT.

[GRAPHIC OMITTED]
LIGHTHOUSE GRAPHIC

Flaherty & Crumrine
PREFERRED INCOME
OPPORTUNITY FUND

                                    Quarterly
                                     Report

                                 August 31, 2005

                        web site: www.preferredincome.com

ITEM 2. CONTROLS AND PROCEDURES.

(a)      The registrant's  principal executive and principal financial officers,
         or  persons  performing  similar  functions,  have  concluded  that the
         registrant's  disclosure  controls and  procedures  (as defined in Rule
         30a-3(c)  under the  Investment  Company Act of 1940,  as amended  (the
         "1940 Act") (17 CFR 270.30a-3(c)))  are effective,  as of a date within
         90 days of the filing date of the report that  includes the  disclosure
         required by this paragraph, based on their evaluation of these controls
         and  procedures  required by Rule  30a-3(b)  under the 1940 Act (17 CFR
         270.30a-3(b))  and Rules  13a-15(b) or 15d-15(b)  under the  Securities
         Exchange   Act  of  1934,   as  amended   (17  CFR   240.13a-15(b)   or
         240.15d-15(b)).

(b)      There  were  no  changes  in the  registrant's  internal  control  over
         financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
         CFR  270.30a-3(d))  that occurred during the  registrant's  last fiscal
         quarter that have  materially  affected,  or are  reasonably  likely to
         materially  affect,  the  registrant's  internal control over financial
         reporting.

ITEM 3. EXHIBITS.

Certifications  pursuant to Rule 30a-2(a)  under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED

By (Signature and Title)* /S/ DONALD F. CRUMRINE
                         -------------------------------------------------------
                          Donald F. Crumrine, Director, Chairman of the Board
                          and Chief Executive Officer
                          (principal executive officer)

Date     OCTOBER 17, 2005
    ----------------------------------------------------------------------------


Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934 and the
Investment  Company  Act of  1940,  this  report  has been  signed  below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

By (Signature and Title)* /S/ DONALD F. CRUMRINE
                         -------------------------------------------------------
                          Donald F. Crumrine, Director, Chairman of the Board
                          and Chief Executive Officer
                          (principal executive officer)

Date     OCTOBER 17, 2005
    ----------------------------------------------------------------------------


By (Signature and Title)* /S/ R. ERIC CHADWICK
                         -------------------------------------------------------
                          R. Eric Chadwick, Chief Financial Officer, Treasurer,
                          Vice President and Secretary
                          (principal financial officer)

Date     OCTOBER 17, 2005
    ----------------------------------------------------------------------------



* Print the name and title of each signing officer under his or her signature.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CERT
<SEQUENCE>2
<FILENAME>cert.txt
<DESCRIPTION>302 CERT
<TEXT>
  CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302
                           OF THE SARBANES-OXLEY ACT

I, Donald F. Crumrine, certify that:

     1.  I have  reviewed  this  report  on  Form  N-Q of  Flaherty  &  Crumrine
         Preferred Income Opportunity Fund Incorporated;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the schedules of  investments  included in this
         report fairly present in all material  respects the  investments of the
         registrant as of the end of the fiscal  quarter for which the report is
         filed;

     4.  The registrant's other certifying  officer(s) and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Rule 30a-3(c) under the Investment  Company Act of 1940) and
         internal  control  over  financial  reporting  (as  defined  under Rule
         30a-3(d) under the  Investment  Company Act of 1940) for the registrant
         and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
             disclosure  controls  and  procedures  to  be  designed  under  our
             supervision,  to ensure that material  information  relating to the
             registrant,  including its consolidated subsidiaries, is made known
             to us by others  within  those  entities,  particularly  during the
             period in which this report is being prepared;

         (b) Designed such internal control over financial reporting,  or caused
             such internal control over financial reporting to be designed under
             our  supervision,  to provide  reasonable  assurance  regarding the
             reliability of financial reporting and the preparation of financial
             statements  for  external  purposes in  accordance  with  generally
             accepted accounting principles;

         (c) Evaluated the effectiveness of the registrant's disclosure controls
             and procedures and presented in this report our  conclusions  about
             the effectiveness of the disclosure controls and procedures,  as of
             a date  within 90 days  prior to the  filing  date of this  report,
             based on such evaluation; and

         (d) Disclosed  in this report any change in the  registrant's  internal
             control  over  financial   reporting   that  occurred   during  the
             registrant's   most  recent  fiscal  quarter  that  has  materially
             affected,  or  is  reasonably  likely  to  materially  affect,  the
             registrant's internal control over financial reporting; and

     5.  The registrant's  other  certifying  officer(s) and I have disclosed to
         the  registrant's  auditors and the audit committee of the registrant's
         board of directors (or persons performing the equivalent functions):
<PAGE>

         (a) All significant  deficiencies and material weaknesses in the design
             or operation of internal control over financial reporting which are
             reasonably  likely to adversely affect the registrant's  ability to
             record, process, summarize, and report financial information; and

         (b) Any fraud,  whether or not material,  that  involves  management or
             other  employees  who have a significant  role in the  registrant's
             internal control over financial reporting.

Date: OCTOBER 17, 2005   /S/ DONALD F. CRUMRINE
      ----------------   -------------------------------------------------------
                         Donald F. Crumrine, Director, Chairman of the Board
                         and Chief Executive Officer
                         (principal executive officer)


<PAGE>


   CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302
                           OF THE SARBANES-OXLEY ACT

I, R. Eric Chadwick, certify that:

     1.  I have  reviewed  this  report  on  Form  N-Q of  Flaherty  &  Crumrine
         Preferred Income Opportunity Fund Incorporated;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the schedules of  investments  included in this
         report fairly present in all material  respects the  investments of the
         registrant as of the end of the fiscal  quarter for which the report is
         filed;

     4.  The registrant's other certifying  officer(s) and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Rule 30a-3(c) under the Investment  Company Act of 1940) and
         internal  control  over  financial  reporting  (as  defined  under Rule
         30a-3(d) under the  Investment  Company Act of 1940) for the registrant
         and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
             disclosure  controls  and  procedures  to  be  designed  under  our
             supervision,  to ensure that material  information  relating to the
             registrant,  including its consolidated subsidiaries, is made known
             to us by others  within  those  entities,  particularly  during the
             period in which this report is being prepared;

         (b) Designed such internal control over financial reporting,  or caused
             such internal control over financial reporting to be designed under
             our  supervision,  to provide  reasonable  assurance  regarding the
             reliability of financial reporting and the preparation of financial
             statements  for  external  purposes in  accordance  with  generally
             accepted accounting principles;

         (c) Evaluated the effectiveness of the registrant's disclosure controls
             and procedures and presented in this report our  conclusions  about
             the effectiveness of the disclosure controls and procedures,  as of
             a date  within 90 days  prior to the  filing  date of this  report,
             based on such evaluation; and

         (d) Disclosed  in this report any change in the  registrant's  internal
             control  over  financial   reporting   that  occurred   during  the
             registrant's   most  recent  fiscal  quarter  that  has  materially
             affected,  or  is  reasonably  likely  to  materially  affect,  the
             registrant's internal control over financial reporting; and

5.            The registrant's other certifying  officer(s) and I have disclosed
              to the  registrant's  auditors  and  the  audit  committee  of the
              registrant's   board  of  directors  (or  persons  performing  the
              equivalent functions):


<PAGE>

         (a) All significant  deficiencies and material weaknesses in the design
             or operation of internal control over financial reporting which are
             reasonably  likely to adversely affect the registrant's  ability to
             record, process, summarize, and report financial information; and

         (b) Any fraud,  whether or not material,  that  involves  management or
             other  employees  who have a significant  role in the  registrant's
             internal control over financial reporting.

Date: OCTOBER 17, 2005     /S/ R. ERIC CHADWICK
      ----------------     -----------------------------------------------------
                           R. Eric Chadwick, Chief Financial Officer, Treasurer,
                           Vice President and Secretary
                           (principal financial officer)

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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