Today's press is full of articles criticizing the proposed bad bank law (for example this article on Spiegel Online).
The gist: As banks will ultimately still be responsible for their toxic assets, it's not attractive for them to place them in a bad bank, and it doesn't help their capital base either. Therefore, it is expected that the whole concept will turn into a flop.
Sure. If you want to give banks an incentive to remove problem assets, and if you want to improve their capital base without massive capital increases (either by "normal shareholders" or via nationalization), you need to buy those assets from the banks at attractive prices, i.e. way above fair value. In the process, bank shareholders win, taxpayers lose. The law commendably tries to avoid this wealth transfer, but the inevitable consequence is: This doesn't really help the banks. What they need is fresh capital, and the law doesn't offer them a way to get it.
Der Spiegel has also finally discovered another very valid point:
The plan only deals with "toxic securities", as if American subprime stuff was the only problem facing German banks. Good old-fashioned non-performing loans are not covered. Unfortunately, those non-performing loans are now starting to roll in, and will soon turn into a flood: Germany is in its worst recession ever, and bank loans have a nasty habit of becoming non-performing during recessions.